PALO ALTO — In the last three months, Tesla took on a multibillion dollar acquisition, ramped up factory production and revealed a broad, new corporate strategy.
One challenge it did not meet — analyst expectations.
The Palo Alto electric vehicle maker on Wednesday reported a worse than expected loss of $2.09 per share during the second quarter, or $1.06 per share excluding certain expenses. Analysts polled by Thomson Reuters estimated a loss of 95 cents per share, or 52 cents per share excluding expenses. They projected the company would bring in $1.6 billion in revenue during the period.
The second quarter loss of $293 million was a 59 percent increase from the same quarter a year ago, on revenue of $1.3 billion, up 33 percent from last year. Adjusted for certain costs, the electric vehicle maker said it earned $1.6 billion.
CEO Elon Musk said the company emerged from “production hell” in June, and expects a steady flow of vehicles for the rest of the year. Tesla expects to boost its bottom line with the large-scale production and delivery of the Model X SUV, a crossover vehicle designed to appeal to families. It also refreshed the Model S design and added a lower-cost version.
Stock-watchers have been sanguine about the electric vehicle maker turning its first profit this year, although it appears unlikely. Musk said the company could hit the mark, if investors exclude capital expenses to build the Model 3. The new sedan is expected to roll out next year, and carry a starting price of $35,000.
Karl Brauer, senior analyst for Kelley Blue Book, said two of the company’s key milestones — the proposed purchase of SolarCity and the Model 3 launch — are coming in the next two years. “The bigger question: how long can Tesla lose money, and how wide can its losses get, before Wall Street cries foul?” Brauer asked.
Baird Equity Research still has faith in Tesla’s technology and innovation. “We continue to believe demand for Tesla vehicles remains strong, and believe anything Tesla can do to address demand would benefit the stock,” analyst Ben Kallo wrote.
The company shipped 14,402 vehicles in the second quarter, less than its target of 17,000. The company blamed the disappointing numbers on the busy production ramp up and more than 5,000 vehicles in transit. Tesla ended the quarter producing just under 2,000 Model S and Model X vehicles a week. It expects to raise that figure to 2,400 weekly in an effort to ship 50,000 sedans and SUVs in the second half of the year.
On Monday, the company approved a $2.6 billion acquisition of SolarCity, the country’s largest solar panel installer. The deal still needs approval from the Securities and Exchange Commission and shareholders. Investors dropped the value of both companies following the announcement.
Tesla stock dropped about 1 percent in after hours trading Wednesday.
The company’s quarterly update also revealed plans to add stores in urban markets, including Taipei, Seoul and Mexico City. It expects to open retail shops on the average of one every four days through the end of the year. Those sites could expand to offer SolarCity products, if the proposed merger is approved.
Musk also said the company will unveil part of its new product line, a semi-truck and a minibus within the next six to nine months. The vehicles will not immediately go into production.
Contact Louis Hansen 408-920-5043. Follow him at Twitter.com/HansenLouis.
