Tesla shares rise despite bigger Q2 loss
Electric automaker Tesla on Wednesday (Aug 1) reported a huge second-quarter loss of US$717.5 million - worse than analysts expected - but its share price rose on news the company was on track to become profitable this year.
The company has faced multiple controversies in recent months, many of them stemming from comments made by enigmatic CEO Elon Musk.
The US$717.5 million loss was more than twice the US$336.4 million loss reported in the same quarter a year ago. Revenues meanwhile jumped 43.5 per cent to US$4.0 billion.
The company also burned through less cash than many analysts expected.
Tesla said its closely-watched ramp-up of production of the Model 3 has hit its stride after earlier missing a series of targets.
Output of the Model 3, the company's first targeting the middle market and a major gamble for Musk, met a 5,000 per week benchmark in June and repeated that pace "multiple times" in July.
Tesla said it is on track to hit 6,000 vehicles per week by late August and expects to reach 10,000 per week "sometime next year."
The electric car maker announced in June that it would cut nine percent of its staff in a bid to achieve profitability.
In its earnings statement, Tesla projected that it would reach profitability in the third quarter and stay profitable in the fourth quarter.
"Going forward, we believe Tesla can achieve sustained quarterly profits, absent a severe force majeure or economic downturn, while continuing to grow at a rapid pace," the company said.
"Our first impression is positive," said CFRA Research analyst Efraim Levy.
"We like the more muted tone of the company's outlook, with the absence of unnecessary new stretch goals," Levy said. "Perhaps it reflects a more cautious Elon Musk."
Musk has been at the centre of numerous controversies in recent months as the company has sprinted in an effort to reach ambitious goals.
Earlier this month, Musk apologised for calling British caver Vernon Unsworth, who helped rescue 12 Thai boys from a cave a "pedo," short for pedophile, after Unsworth spoke dismissively of the Tesla chief's idea for bringing the boys to safety.
Musk is also embroiled in legal fight with a former employee whom he accused of sabotage. The ex-employee, Martin Tripp, has countersued for defamatory statements.
The Tesla chief has also reacted defensively to questions from the new media and from the financial community, abruptly shutting down questions from analysts during the company's May conference call on earnings.
Shares rose 5.3 per cent in after-hours trading to US$316.85.