Tesla Motors released its earnings report tonight after closing bell, posting adjusted losses of 87 cents per share, compared to the consensus of 16 cents per share, and revenue of $1.75 billion, against the consensus of $1.85 billion. In the fourth quarter of 2014, the automaker reported adjusted losses of 13 cents per share and revenue of $1.1 billion.
Shares of Tesla edged higher by as much as 3.66% to $148.93 in after-hours trades. The stock has plunged by more than 38% so far year to date, significantly underperforming the S&P 500 Index. It seems management’s positive commentary in tonight’s shareholder letter struck a chord with investors.
Tesla sees strong order growth for Model S, Model X
Tesla’s GAAP revenue was $1.21 billion, while GAAP losses were $2.44 per share. Automotive revenue was $1.65 billion, while the non-GAAP automotive gross margin was 20.9%, excluding zero-emission credits. Services and other revenue was $97 million.
One of the big issues Tesla has been dealing with of late has been the Model X as manufacturing it is proving to be much more difficult than previously thought. The automaker only shipped 208 of the crossover vehicles in 2015, which is significantly fewer than what analysts were hoping for. Because the Model X is being produced on the same assembly line as the Model S, for now anyway, the bottleneck being caused by the production problems might be weighing on total deliveries. However, Tesla did say tonight that reservations for the SUV climbed by more than 75% year over year.
The good news though is that Tesla was able to meet the low end of its most recent delivery guidance, shipping 50,580 vehicles in 2015, against the lowered guide of 50,000 to 52,000. For 2016, management said they expect to ship……. vehicles. The previous production target of 1,600 to 1,800 cars a week implies at least 83,200 cars will be produced this year.
Questions for Tesla’s earnings call
Cash burn will also likely be an issue in tonight’s earnings call as the development of the Model 3 and construction of the gigafactory will be cutting into profits. Some analysts believe Tesla might need to raise capital this year, although management has said they want to wait until at least next year after the company picks up some momentum from Model 3 preorders. Tesla said tonight it is planning to unveil the car at an event on March 31 and that it is on schedule for productions and deliveries to start late next year.
Another question could be whether demand for the Model S is waning. Management has been emphasizing that Tesla is production-constrained and not demand-constrained, but investors will undoubtedly want proof of this. Tonight in the shareholder letter, they said orders for the sedan grew by more than 35% year over year.