Telsa Profits Fall Short of Expectations

Tesla’s shares dropped in after-hours trading after the company posted its fourth-quarter earnings report, revealing profits that fell short of Wall Street’s expectations.

CNBC reports that following the posting of Tesla’s fourth-quarter earnings report, the company’s stock fell in aftermarket trading. Tesla cited a number of reasons for its less than stellar performance, such as a decline in revenue from the sale of regulatory credits, lowered prices across all Tesla vehicles and higher import duties on Chinese manufactured parts.

CNBC noted the company’s performance in comparison to Wall Street analysts expectations:

• Adjusted EPS: $1.93 versus $2.20, according to average estimates.
• Revenue: $7.23 billion versus $7.08 billion, according to average estimates.

The company did, however, report that its cash position had improved significantly by $1.45 billion despite having to spend $230 million to repay convertible bonds this quarter. Tesla aims to increase its vehicle delivery rate by 45 to 65 percent in 2019, delivering 360,000 to 400,000 vehicles.

Jessica Caldwell, Edmunds’ executive director of industry analysis, does not see a bright future for Musk’s electric car company: “Things really aren’t going to get any better for Tesla in the US than they did at the end of 2018,” she told CNBC. “Turning a profit, creatively addressing production challenges and getting the Model 3 to the masses were huge milestones, but keeping up this momentum is going to be virtually impossible.”

Caldwell stated that Tesla will be facing tougher competition from established automakers such as Audi, Porsche, and Jaguar in 2019: “Tesla’s in an awkward purgatory between being a startup and a mainstream automaker, and the biggest open question heading into 2019 is where the company really goes from here,” Caldwell said. “Tesla is used to owning the spotlight, but for the next year we might see a lower-key Tesla as the company takes baby steps to keep things moving along while it plans for the future.”

Whether Tesla will have to raise more cash to cover its $920 million bond payment on March 1 remains to be seen. Tesla assured investors that they have “sufficient cash on hand to comfortably settle in cash our convertible bond that will mature in March 2019.”