Tesla dives deeper into red ink

Electric vehicle maker Tesla’s financial bloodbath continues, as the company reported a loss of $675.4 million for the 2017 fourth quarter ($4.01/share), compared to $619.4 million ($3.70/share) loss for the third quarter and a $121.3 million (78 cents/share) loss for the final quarter of 2016.

Tesla CEO Elon Musk

Bears and short-sellers are following the bloody trail, although they have yet to pounce. The company’s shares rose $11.03/share, a 3.3% gain, to $345 on Wednesday, before the earnings call. Shares were trading at $338 on the Nasdaq as this article was written. The stock symbol is TSLA.

Tesla’s woes are driven in large part by its inability to solve production problems for its Model 3, which is supposed to bring the carmaker to profitability. The investment website Seeking Alpha, long a Tesla skeptic, noted “a major development” that Tesla didn’t discuss at the earnings call: further delays for the Model 3.

Tesla Model 3

Seeking Alpha analyst Anton Wahlman wrote, “This major development is that Tesla has reportedly delayed the $36,000 version of the Model 3 by what seems like nine months. Instead of very soon, the $36,000 deliveries will now take place in late 2018 if you were a Day 1 deposit holder (March 31, 2016), or otherwise in 2019. That most likely means all but a very few Model 3 buyers won’t get the $7,500 federal tax credit. But new competitors will.”

Wahlman said, “How many Model 3 deposit holders will now ask for their money back? It could be a reversal of the 455,000 deposit hoopla of 2016-17.” He added, “And you know what they say when Tesla says there’s a nine-month delay? Think 18 months.”

Analyst Mark B. Spiegel of Stanphyl Capital told the LA Times that Tesla is too dependent on the unsustainable “zero emissions vehicle” credits and production and delivery rates that make it vulnerable from competitors such as the GM, Nissan, and VW. “This was yet another awful quarter from Tesla,” he said.

Marketwatch reported, “Over the past 12 months, TSLA insiders have acquired 211,000 shares and sold 501,000, for a net disposition of 290,000 shares.” Wired commented that “short interest is massive.”

Another blow struck Tesla as it announced its fourth-quarter losses. The company announced that Jon McNeill, head of sales and service has left the company to join the LYFT, the ride-hailing company, as chief operating officer. Tesla said that “there are no plans so far to search for a replacement.”

Tesla is noted for its optimistic claims, which often distract from its actual performance. Marketwatch concluded, “2018 could be the year the market starts to see through this bullish thesis. In reality Tesla’s tchnological advantage is slim or even nonexistent, and it’s facing a growing stable of competitors with more resources and more expertise. As competitors begin eating into its market share, Tesla won’t be able to keep distracting from its current problems by promising the next big thing. This increased competition, combined with sky-high valuation, lands Tesla in the Danger Zone.”

— Kennedy Maize


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