Tesla, Inc.’s (NASDAQ:TSLA) incurred adjusted loss of $2.92 per share in third-quarter 2017, wider than the Zacks Consensus Estimate of a loss of $2.45. The company had reported earnings of 70 cents per share in the prior-year quarter.
The reported net loss in the quarter was $671.2 million compared with the year-ago net income of $21.9 million.
Revenues increased to $2.98 billion from $2.30 billion registered in third-quarter 2016. The figure also surpassed the Zacks Consensus Estimate of $2.92 billion.
Tesla delivered 26,137 vehicles in the third quarter of 2017. In third-quarter 2017, the combined sales of Model S and Model X grew 4.5% from the year-ago figure.
Revenues from Automotive sales increased to $2.36 billion in the reported quarter from $2.15 billion a year ago.
Energy generation and storage revenues soared from $23.3 million in the third quarter of 2016 to $317.5 million in the reported quarter.
Services and Other revenues increased to $304.3 million from $126.4 million in the year-ago quarter.
Tesla’s third-quarter automotive gross margin was 18.7%, declining 628 basis points (bps) from second-quarter 2017 due to considerable rise in manufacturing expenses of Model 3.
Energy generation and storage gross margin declined 368 bps sequentially in the quarter to 25.3%.
Financial Position
Tesla had cash and cash equivalents of $3.53 billion as of Sep 30, 2017 compared with $3.39 billion, as of Dec 31, 2016.
Net cash used in operating activities amounted to $300.6 million in the third quarter compared with net cash provided of $423.6 million a year ago. Capital expenditures jumped to $1.12 billion from $247.6 million in the year-ago quarter.
Business Expansion
In third-quarter 2017, Tesla opened 18 new stores and service locations and added 126 new Supercharger stations.
Model 3 Update
Tesla fell short of its third-quarter 2017 production goals of the new Model 3 sedan. The company produced 260 Model 3s and delivered 222, missing the production target of 1,500. This indicates that production has not been as smooth as anticipated.
Tesla intends to achieve a production rate of 5,000 Model 3 vehicles per week by late first-quarter 2018.
Outlook
Currently Tesla expects to deliver around 100,000 units of Model S and Model X in 2017, up 30% from 2016. However, the company intends sequentially cut down production of Model S and Model X by 10% in the fourth quarter in order to divert more resources toward the production of Model 3. This will result in a decline in the inventory level of finished Model S and Model X vehicles.
The company expects Model 3 gross margin to reach break-even level by the end of fourth-quarter 2017 as a result of higher capacity utilization. Also, the company expects to achieve the target gross margin level of 25% in 2018.
The company also anticipates a capital expenditure of approximately $1 billion in fourth-quarter 2017.
Zacks Rank & Other Key Picks
Tesla currently carries a Zacks Rank #5 (Strong Buy).
A few better-ranked companies in the auto space are Daimler AG (NYSE:F) , BorgWarner Inc. (NYSE:BWA) and Ford Motor Company (NYSE:F) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Daimler has an expected long-term growth rate of 2.8%.
BorgWarner has an expected long-term growth rate of 9%.
Ford has an expected long-term growth rate of 10.7%.
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