Lesser Revenue, Higher Losses Than Expected For Tesla – Market News Store

Lesser Revenue, Higher Losses Than Expected For Tesla

Demand for Tesla’s electric cars dropped after it lost its buyers a significant tax credit, on January 1. This lead to losses greater than expected with revenues getting hit as well, in Q1 2019, and investors are being prepared for a poor second quarter as well, before profits are expected to go up.

Tesla reported %2.90 loss per share on adjustment basis whereas Refinitiv had estimated only 69 cents. Even revenues of $4.54 billion were lower than Refinitiv’s expectation of $5.19 billion. The loss per share on non-adjustment basis was $4.10 for the quarter that ended March 31.

After closing down by 2% Wednesday, Tesla shares were almost flat once markets closed.

The company had warned all stakeholders in the beginning that income from the first quarter is likely to have a negative impact due to delivery volumes being lower than estimated and multiple pricing adjustments. The quarter saw a delivery of 63,000, well below the expected 76,000.

While vehicle sales have risen 36% from a year back, it was still below the fourth quarter’s figures by 41%. CEO Elon Musk believes logistical challenges as well as seasonality affected sales in the first 3 months.

With demand levels fluctuating for Model 3 sedans, investors of Tesla are trying to understand if the model can be made profitably, after frequent price changes. Today, in North America, CFO Zach Kirkhom says the average price of Tesla’s Model 3 stands at $50,000.

Musk also revealed the company’s plan to diversify into insurance, probably by next month itself. He said although capital was never a constraint for the company’s growth, it would a great idea to raise some capital now. With $180 million debt due this month, Tesla announced their intentions to shut a few stores and implement layoffs to tighten costs.

A plant to assemble cars and a battery factory are currently being built in Shanghai as Tesla prepares to manufacture compact SUVs (Model Y) and Semi trucks.

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