Musk Burns $739.5-M of Tesla’s (NSADAQ:TSLA) Cash to Record Q-2 Loss

Musk Burns $739.5-M of Tesla’s (NSADAQ:TSLA) Cash to Record Q-2 Loss

Musk Burns $739.5-M of Tesla’s (NSADAQ:TSLA) Cash to Record Q-2 Loss


Fledgling EV maker, Tesla, Inc, (NASDAQ:TSLA) burned $739.5-M in cash last Quarter, a company record $717.5-M net loss as it rolled out a few more electric cars.

But CEO Elon Musk reiterated a promise to post net profits in Q’s 3 and 4 on a conference call, and he apologized to analysts he cut off on the Q-1 call.

Telsa’s shares soared 11% to $334.18 in after-hours trading.

The Big Q: Why?
The Big A: There are no answers to Why questions in my experience.

The net loss more than 2X’d from the same Quarter a year ago, and was slightly larger than Q-1.

The Palo Alto, California, company said it lost $4.22/share in Q-2, as revenue grew 43% to just over $4-B. Adjusted for stock-based compensation, the company lost $3.06/share. That was worse than all Wall Street estimates. Analysts polled by FactSet expected a $2.88/share.

In a statement released after the markets closed Wednesday, Tesla said it expects to produce 50,000 to 55,000 M3s in the Q-3, an increase of at least 75% from Q-1.

Tesla spent millions to just mark a goal of producing 5,000 M3 sedans per week by the end of June. It now says production is rising, with the goal of 6,000 per week by the end of August. The company said it expects to reach 10,000 Model 3s per week “sometime next year.”

We have never seen a Musk Prophecy come true.

Cash from selling the M3, which starts at $35,000, but is far higher with ‘necessary’ options, is Key to holding off more borrowing and turning a profit.

The company said it expects to grow at a rapid pace and it should achieve sustained Quarterly profits barring an unforeseen event or economic downturn.

“We expect to generate positive cash including operating cash flows and capital expenditures,” the statement said.

The company said it has cut back on capital spending by changing its strategy to produce the M3 on existing assembly lines, 1 in a tent, rather than adding all-new lines.

Tesla projected total Y 2018 capital spending at just below $2.5-B, less than Y 2017’s $3.4-B.

In Q-2, Tesla laid off 9%of its workforce as it worked toward Mr. Musk’s promise of making money. The company has never turned an annual profitsince becoming public in Y 2010.

Tesla has also asked parts suppliers for refunds.

Last Quarter, Mr. Musk dismissed analysts who asked questions about M3 reservations and other financial matters during the Quarterly conference call.

HeffX-LTN Analysis for TSLA: Overall Short Intermediate Long
Bearish (-0.27) Bearish (-0.45) Neutral (-0.19) Neutral (-0.18)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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