Tesla Shares Drop On Investor Concerns

Tesla recently announced fourth-quarter and full-year financial results that dampened investor enthusiasm for the company. The company lost $121.3 million, or 78 cents per share, for the quarter including the last three months of 2016. That was less than half the $320.4 million loss from the year-earlier quarter. On an adjusted basis, Tesla lost 69 cents per share. FactSet polled analysts expected a loss of 53 cents per share.

Revenue rose 88 percent to $2.28 billion, beating estimates of $2.22 billion. Sales rose 27 percent from a year ago to 22,252 vehicles. Production of Tesla’s Model S Sedan and Model X SUV increased 77 percent during the quarter, rising to 24,882 vehicles produced.

The company reported $131.4 million in revenue from its energy generation and storage businesses during the quarter. Those results included the acquisition of solar panel maker SolarCity, which closed on Nov. 21. The company also said it increased cash during the quarter by $309 million.

The recently unveiled manufacturing timeline for the Model 3 sedan says that Tesla will commence production of the vehicle this July. Musk said the company will produce 5,000 cars per week this year when Model 3 production gets into full swing. The company expects to make $2 billion to $2.5 billion in capital investments before it starts Model 3 production.

For the full year, Tesla reported a net loss of roughly $675 million, or $4.68 per share. Full-year revenue rose 73 percent just over $7 billion, higher than analysts’ estimates of $6.9 billion. For the first half of this year, Tesla said it expects to deliver between 47,000 and 50,000 Model S and Model X vehicles, a 71 percent increase over a year ago.

The company’s shares fell by more than 6 percent before the beginning of normal trading on Monday morning. The drop reduced Tesla CEO Elon Musk’s net worth by more than $500 million. Musk is Tesla’s largest individual stockholder, owning nearly a quarter of company shares. According to FORBES’ real-time rankings of the world’s billionaires, Musk is now the 87th richest person on the planet with a net worth of $13.4 billion.

Tesla shares have surged 40 percent since the start of December, but analysts are split on whether Tesla’s stock can maintain its current pace. The company shares are trading at about 90 percent of their all-time high. Investors are concerned about the cash flow squeeze Tesla may face as it increases output in 2017. The newly announced departure of current chief financial officer Jason Wheeler also has investors concerned.


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