Tesla sinks below $300 ahead of earnings

Tesla founder and CEO Elon Musk takes questions at a recent press conference

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Tesla founder and CEO Elon Musk takes questions at a recent press conference
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Dave Mosher/Business Insider

  • Tesla is set to report second-quarter earnings after the closing bell Wednesday.
  • Analysts expect the electric-car maker to report an adjusted loss of $2.90 per share on revenue of $2.97 billion.
  • Production numbers will be at the front of investors’ minds after Tesla said it reached its goal of making 5,000 Model 3s per week on July 1.
  • Shares were trading slightly lower ahead of the report.
  • Follow Tesla’s stock price in real-time here.

Shares of Tesla fell about 0.7%, dropping below the $300 level that has plagued the stock all year, Wednesday ahead of the electric-car maker’s earnings report that’s due out after the closing bell.

Wall Street is expecting Tesla to post an adjusted loss of $2.90 per share on revenue of $2.974 for the second quarter. Cash burn and total production vehicle numbers will be put under the microscope as the company gears up to meet CEO Elon Musk’s goals for profitability by the end of the year.

Tesla’s cash burn jumped to $745 million in the first quarter. That’s up from the previous quarter’s 276.8 million, but well off it’s high of $1.42 billion from the third quarter of 2017. Cash burn has been a huge concern for Wall Street analysts, some of whom Musk interrupted and ignored on the last earnings call. Both Goldman Sachs and UBS see a capital raise being necessary in the near future.

Even if Tesla reaches profitability, a capital raise may be necessary to fuel its planned projects in China and Europe, UBS said this week. It may also need the money to pay for debt that is soon coming due. Last week, investors were paying more than ever for credit default swaps to insure against a potential Tesla bond crisis.

“If Tesla is able to take advantage of high average selling prices (ASPs) in Q3 or Q4 it is likely they become profitable for the quarter, and we would expect a capital raise to follow,” analyst Colin Langan said. He expects the company to report a cash burn of $900 million on Wednesday.

On July 1, Musk proclaimed that Tesla was “finally a real car company” after hitting its goal of producing 5,000 Model 3 sedans per week. The newest vehicle is supposed to be Tesla’s first “mass-market” affordable car, but facing a cash crunch, the company has only produced higher-end all-wheel-drive models that go for sticker prices well into the $65,000 range. There has been no word from the company on when the $35,000 base model might be available.

Shares of Tesla are down 7.2% since the start of 2018.

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Tesla stock price

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Markets Insider