Tesla Inc (NASDAQ: TSLA) in the third quarter of FY 17 has posted its biggest quarterly loss ever, that send the shares down nearly 5.9 percent on November 2nd, 2017 (as of 10:19AM EDT; Source: Google finance).
Tesla has pushed back its target for volume production on its new Model 3 sedan by about three months, and it is difficult to predict how long it would take to fix all production bottlenecks. Tesla is facing a crucial test in its growth strategy as the company ramps up production of the Model 3, its new sedan that starts at $35,000, about half the price of its flagship Model S. Although Tesla has made inroads among luxury car buyers with the advanced technology and innovative design in its Model S sedan and Model X SUV, but the Model 3 on which its long-term viability rests. The company continues to burn through cash, and has spent $1.1 billion in capital expenditures in the third quarter. Tesla had a negative free cash flow in the third quarter. In the past two quarters, therefore, Tesla has burned through more cash than the previous six combined. Further, TSLA has burned through roughly four out of every five of the $3.2 billion dollars it has raised since late March through selling new equity and convertible debt and its debut in the high-yield bond market. Tesla said the main constraint was its battery module assembly line at its Nevada Gigafactory, where the company had to redesign part of the production process.
Tesla in the third quarter of FY 17 has reported the adjusted earnings per share of 15 cents, beating the analysts’ estimates for the adjusted earnings per share of 13 cents. The company had reported the adjusted revenue of $2.48 billion in the third quarter of FY 17, beating the analysts’ estimates for revenue of $2.47 billion.
Additionally, Tesla estimates that the production might hit 5,000 a week by the end of the first quarter of 2018. As for this year, it might be in “the thousands” by the time New Year’s Eve rolls around. The company has refused to say what the current run rate was. But the market estimate that Tesla will be lucky to produce 10,000 Model 3 vehicles in total this year, or an average of 400 a week for the second half, which is roughly 5 to 10 percent of the original guidance. As for the earlier target of 10,000 a week in 2018.