Tesla (TSLA) Tanks After Reporting Wider Loss Than Expected, But Profit In Sight

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03:02:50 pm on February 21, 2013

Tesla Motors (TSLA) reported earnings last night that provided a bit of fuel for skeptics, but hope remains and the company has indicated profitability is just around the corner.  In the near term though, the stock is getting hit hard today and slicing through key support at the 50 day moving average this morning.  Let’s see if the stock can make a comeback and close at the 50 or just above.  That would be an indication of a fairly strong stock and keep the bullish trend intact.

It wasn’t a terrible quarter from Tesla, but far from good too.  The company reported revenues that were just ahead of estimates at $306 million, but reported a wider loss than what analysts were looking for (-.65 vs .53).  Helping to drive the stock lower was likely a soft deliveries number. Deliveries were 2,400 for the quarter and about 2,600 for the year which is below what the company was expecting.

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For the optimists, the biggest takeaway was the fact that the company expects to achieve a profitable quarter for Q1, which is big considering the company wasn’t expecting to break even until closer to the end of the year.  The company credits increasing efficiencies and economies of scale.

Here are some highlights from the conference call (read in its entirety at Seeking Alpha):

–  we are going to start marketing heavily in Europe and then start doing the same in Asia.

– feel very confident of achieving a demand level in excess of 20,000 units a year. And I think, we’ll see quite a bit larger than that number as we expand to Asia and Europe and actually start marketing there.

– expect to deliver 20K Model S this year and achieve 25% gross margin by end of year

– There was a time several months ago where every car that came off the line would require some degree of rectification, but now that is very a fairly small percentage.

– we are not demand constrained, we are intentionally production constrained.

– we really have very high confidence that we will have a profitable first quarter.

– Could we step through your 1Q guidance for a bit. Given your guidance for 4,500 deliveries, mid-teen gross margins, and you’re calling for a 15% reduction in R&D versus 4Q,

– I think for a long distance- trip right now depending upon where are you in the country, a little bit of extra planning is needed.

– I do think next year leasing will be a big factor.

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