Tesla Advances as Revenue Beats Estimates: San Francisco Mover

Tesla Model S
A Tesla Model S. The all-electric car comes with an 85-kilowatt-per-hour lithium-ion battery pack. Source: Tesla via Bloomberg

Tesla Motors Inc., the electric-car maker led by Elon Musk, rose the most in almost six months after the company’s third-quarter revenue exceeded analysts’ estimates as Model S production accelerates.

The shares increased 8.9 percent to $31.50 at the close in New York, for their biggest gain since May 10. They have climbed 10 percent this year.

Revenue declined 13 percent from a year earlier to $50.1 million, the Palo Alto, California-based company said today in a statement. The average of 11 estimates compiled by Bloomberg was $45.8 million. Excluding some items, Tesla’s loss was 92 cents a share, matching the average estimate.

“The market is reacting more because results weren’t worse than the expectations,” Ben Schuman, a Pacific Crest Securities analyst in Portland, Oregon, said in an interview. “They’re ahead in terms of Model S production in the third quarter, though not by too much.” He rates Tesla sector perform.

The carmaker named for inventor Nikola Tesla is racing to expand production of the rechargeable Model S at its Fremont, California, plant, after saying in September that 2012 deliveries wouldn’t reach an initial 5,000-unit goal. Tesla has said that next year it will build at least 20,000 of the cars, which start at $57,400, and add the Model X electric sport-utility vehicle in 2014.

The company’s net loss widened to $110.8 million, or $1.05 a share, from $65.1 million, or 55 cents, a year earlier. Revenue for the quarter includes both the Model S and battery packs and motors for use in shareholder Toyota Motor Corp.’s electric RAV4 SUV.

Output Outlook

“Tesla is really past the point of high risk,” Musk, 41, said on a conference call. Model S production will be at a 20,000-unit annual rate “within four to five weeks,” he said.

The company said full-year sales will be as much as $440 million, reaffirming an earlier forecast.

“Several months ago I said that the coming several months would be the test for Tesla -- the classic phrase is to go through the valley of death,” said Musk, who also leads rocket launch company Space Exploration Technologies Corp. and is Tesla’s biggest shareholder. “I feel as though we’re through that valley at this point.”

Tesla is preparing to supply components for a new Mercedes-Benz model with Daimler AG, which is also an investor in the California company.

Tesla built about 350 vehicles in the quarter and delivered 253 Model S sedans and 68 units of the discontinued Roadster sports car. The production pace grew from 5 cars per week at the start of the quarter to 200 per week at the end of the period, equivalent to a 10,000-unit annual rate, Tesla said today.

‘Critical Threshold’

That rate is “at the critical threshold needed for Tesla to generate positive operating cash flow,” the company said.

Gross profit margin should reach 25 percent by the end of 2012, Tesla said.

“There a lot of people out there who didn’t think they’d make their guidance,” said Elaine Kwei, a Jefferies & Co. analyst in New York who rates Tesla a buy. “There’s definitely a fair amount of short interest out there, so there’s some position covering today.”

As of Oct. 15, about 30.4 million Tesla shares were sold short, giving the company a short-interest ratio of 31 percent, according to data compiled by Bloomberg. People who sell short use borrowed shares and seek to profit by buying back the stock later at a lower price and returning it to the lender.

The carmaker got 2,900 new reservations for the Model S during the quarter, a 30 percent increase from a year earlier. While cancellations also rose, Tesla said net reservations grew to 13,200 vehicles from 11,500 at the end of the second quarter.

During the third quarter, the company completed drawing down the $465 million in U.S. Energy Department loans awarded in 2009 to develop and produce its electric vehicles. Tesla said today that it “pre-funded” a second loan payment in October “related to principal and interest due in March of next year.”


Before it's here, it's on the Bloomberg Terminal. LEARN MORE