Tesla CEO Elon Musk's $5 Billion Apology Tour

Sean Reid
August 2, 2018

Tesla reported a larger loss per share than expected in the second quarter, but there was more revenue and less of a cash burn than expected - all of which resulted in an after-hours surge in share prices that at one point amounted to more than 10 percent.

Musk said he expects the company to achieve sustained quarterly net profits from now on, barring an unforeseen event, supplier problems or economic downturn.

But Tesla shares actually rose by about 4 percent on speculation it will turn profitable before the year's end. Tesla expects to make 50,000 to 55,000 Model 3 cars this quarter.

Tesla Inc said on Wednesday it expects to increase Model 3 production to 6,000 per week by late August, buoying expectations that the Elon Musk-led electric vehicle maker will meet its goal of profitability and positive cash flow in the next two quarters. Adjusted for stock-based compensation, the company lost $3.06 per share.

Tesla also recently announced plans to build a new factory in China, an investment Mr Musk said would be about $2bn and produce about 250,000 vehicles annually.

Beyond operating costs, Tesla has paired down an initial $3.4 billion capital expenditure estimate for the year to a slimmer $2.7 billion.

During a conference call with analysts, Musk said late Wednesday he expects Tesla to report profits in all future quarters as long as the US economy remains strong.

Tesla's stock was up 5% in after-hours trading.

Musk attributed his intemperate remarks this spring to the long work weeks at Tesla and a lack of sleep, while adding that "there's still no excuse for it".

Tesla says it lost almost $743 million between April and June this year, compared with about $785 million last quarter.

The company said it maintained its targeted level of production, making 5,000 Model 3s in a week multiple times in July.

"It's really kind of a mindblowing leap forward for a manufacturing company", Musk said.

Tesla's cash balance fell to $2.2 billion in June, from $2.7 billion in the first quarter.

Had it delivered the auto in June, the subsidy would have lapsed a quarter earlier, a strategic move applauded by Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment Management, which holds Tesla shares.

The company's revenue grew for the sixth straight quarter, mainly thanks to sales of the Model 3.

After quietly upgrading its semi-autonomous driving suite, Autopilot, almost a year ago, Tesla has been working hard on its next-generation hardware.

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