Last month Tesla Motors Inc.’s stocks went down more than 3% after they reported a 14,370 electric car delivery—9,745 of it are its model S sedans while the remaining 4,625 are the luxurious Model X crossover. Although the EV maker manufactured a total of 18,345 cars during the quarter, the delivery was still short of 2,630 as compared to its 17,000 distribution target for the second quarter of fiscal 2016. Their lower-than-expected delivery disappointed many investors, resulting in the drop of its stock. This led to the conclusion that even if Tesla has ramped up its speed in production; it still had to speed up their deliveries as well. According to analysts, if they failed to do this, the car company could possibly be unsuccessful to reach its 500,000 vehicle production target per year by 2020.
Tesla informed that 5,150 vehicles are on ships or trucks ready to be shipped to the customers. It assumes that all pending deliveries will be made in the third quarter.
2Q Earnings Forecast
14,370 is around .80% higher than what Tesla has produced in the second quarter of fiscal 2015 but it still didn’t help in the decrease in the loss per share. Many analysts are predicting that the vehicle manufacturer will report a loss per share of $0.52 more than its loss per share of $0.48 in the same period last year, totaling in around $1 loss per share this quarter. However, this increased loss per share is expected to not affect the revenues this quarter. The revenue is anticipated to fall at $1.6 billion, 36% significantly higher than the $1.20 billion it generated last year.
Many other analysts are concerned about the losses getting broader quarter by quarter, but Wall Street analysts forecast that sales and net profit/loss will both increase on a year-over-year basis. In the last quarter, the automotive company reported a $1.15 billion revenue, 22% significantly higher than last year’s figure of $939 million or $1.6 billion excluding certain items. This reported revenue is in line with the analysts’ expectations.
Tesla and SolarCity
Moving a step closer to Tesla CEO Elon Musk’s dream of combining electric car and solar panel companies, the vehicle producer announced in late second quarter its plan to acquire the solar installation company SolarCity. The all-stock deal priced the company at $2.8 billion and Tesla promised the SolarCity shareholders will receive 0.11 shares of the automaker for every SolarCity share.
According to Tesla, this merger aims to provide the most efficient power sources generated from SolarCity’s technology in solar panels and batteries. This is a huge leap for the automotive company, but some analysts believed that this is a smart move. An analyst at Avondale Partners LLC, Michael Morosi, expressed that it placed Tesla in a different stratosphere. Tesla is a manufacturing company, and Solar City is about to become one as well. They both gain immediate knowledge when they need it most. Another analyst at Needham & Co., Edwin Mok, believed that the business could potentially become profitable in the next 12 to 24 months if combined with a more aggressive approach to reduce operating expenses.
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