Tesla Inc (Nasdaq: TSLA) may not have solved its Model 3 production problems yet, but the company eased some fears about its precarious financial situation on Wednesday afternoon.
Investors and analysts have been getting impatient with Tesla and CEO Elon Musk, but the company reported a much better-than-expected cash burn in the fourth quarter and left its Model 3 production targets unchanged.
Tesla reported a fourth-quarter earnings-per-share loss of $3.04, slightly better than the consensus analyst estimate of $3.10. Fourth-quarter revenue was $3.28 billion, in-line with consensus estimates.
Perhaps most importantly, Tesla reported a $276 million loss in free cash flow on the quarter, after reporting a $1.4 billion loss in the third quarter. Tesla reported a cash balance of $3.4 billion headed into 2018.
In January, Tesla reported just 1,550 Model 3 deliveries in the fourth quarter. Musk had originally said the company would be producing 5,000 Model 3s per week by the end of 2017. After bumping that target from December to late in the first quarter of 2018, Tesla now says it expects to reach the 5,000-per-week target by “the end of Q2.”
Investing.com senior analyst Clement Thibault says Tesla Musk’s outside projects, which include his roles as CEO of SpaceX and The Boring Company, are starting to become a problem for Tesla investors.
“If you consider Musk’s recent Twitter activity, lately he appears to be more eager to sell hats and flamethrowers rather than meeting previously stated production targets for Tesla vehicles or turning around the struggling company,” Thibault says. “We’ve argued repeatedly that Tesla’s fundamental valuation simply can’t be justified.”
Despite Tesla’s lofty valuation, he says investors should be careful short selling a stock that typically doesn’t react to fundamental valuation metrics the same way normal stocks do.
On Tuesday, KeyBanc analyst Brad Erickson said there has been little improvement in the quantity or quality of Tesla Model 3 production in the first quarter of 2018.
“Our channel checks indicate Model 3 deliveries are still ramping very slowly, causing us to lower our 1Q and 2018 Model 3 delivery and gross margin assumptions even further below consensus,” Erickson says. “We found…
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