Tesla Motors (TSLA) Reports Narrower than Expected First Quarter Loss

Shares of Tesla Motors Inc. (TSLA) were trading down -7.01 or -3.22 percent to $223.00 per share in Thursday's premarket after the company reported a lower than expected loss for the company's first quarter yesterday after the market close. Tesla Motors stock closed at $230.43 per share, down -2.52 or -1.08 percent in Wednesday's regular trading session.

Palo Alto, California based Tesla Motors Inc. is a world class electric auto manufacturer that produces two fully powered electric automobiles at the company's single plant in Freemont, California.
The Tesla Roadster and the Tesla Model S, the first fully electric sports car and luxury sedan ever produced. Tesla Motors also markets electrical components to other automakers such as Daimler and Toyota. These include electric powertrain components and lithium-ion battery packs used in electric and hybrid models.

On May 1st, Tesla unveiled its new line of Powerwall batteries for home and small businesses. The new 10kWh batteries, which will be produced at the company's Fremont, California plant will sell for $3,500 and will be able to shift loads, drawing power at a lower rate from the grid and able to act as a backup power source like a generator.

On Wednesday, Tesla reported an adjusted net loss of -$45 million or -$0.36 per share in the company's fiscal first quarter. The loss compares to adjusted earnings of +$0.12 per share in the same period one year ago. On a GAAP basis, the company reported a net loss of -$154 million or -$1.22 per share compared with a loss of -$50 million or -$0.40 per share in 2014's first quarter. Both numbers include a loss of $22 million, or $0.17 per share to account for currency translation due to a strong U.S. Dollar.

Revenue for the first quarter came to $1.095 billion. Analysts predicted the company would report a loss of -$0.50 per share on revenue of $1.23 billion. The company missed unit sale expectations, selling a total of 9,834 automobiles, falling short of its goal of delivering 11,000 vehicles.

While the company's automobile numbers were the main subject, during the earnings conference after the release, Elon Musk, the company's founder and Chief Executive answered more questions on Tesla's foray into the commercial and home battery market with the release of its new Powerwall battery. When asked about consumer's reaction to the new batteries, Musk said, "It's been crazy. We have received reservations for more than 38,000 Powerwalls since we made the announcement. There's no way we could possibly satisfy the demand this year.

Musk was then asked about the profit margin for each Powerwall battery, to which he responded, "This is just a guess right now, but maybe somewhere around 20 percent. Of course, that would by the profit margin for stationary storage products once the company hits mass production at the Gigafactory in 2017.

Tesla stock gained after the earnings release in yesterday's afterhours trading, nevertheless, the stock has been selling off in this morning's premarket. Investors are reacting cautiously to the earnings news, with more focus on the company's battery business getting the lion's share of attention. Some analysts are wary that the company's valuation is higher than it should be, however, in a new market for the company, such as with the Powerwall batteries, the present valuation may justify future profits.

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Published on May 7, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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