Tesla (TSLA) delivered some much-needed good news to investors after Wednesday's market close: it lost less money than analysts expected in the second quarter and gave healthy projections for the production ramp-up of its mass-market Model 3 cars.
For the past quarter, Tesla beat on the top and bottom line. The electric car and solar company reported an adjusted loss of $1.33 per share, which was narrower than the consensus estimate for a loss of $1.82 per share. Revenue more than doubled from the same period last year to $2.79 billion, topping analysts' expectations of $2.52 billion.
Shares were up 7% to $348.71 at Thursday's market open.
Last Friday, Tesla made headlines for delivering its first 30 Model 3 cars at an event in Fremont, Calif. The reviews for the car that starts at $35,000 have been overwhelmingly positive. Since the event, Tesla said it's booking about 1,800 Model 3 net reservations each day, which is in addition to the 500,000 reservations (455,000 when cancellations are factored in) that Tesla CEO Elon Musk had previously announced on Friday. Meanwhile, overall deliveries of Tesla's Model S and Model X vehicles increased by 53% year-over-year.
The company burned $1.2 billion in cash this past quarter, ending the period with about $3.03 billion in cash.
Here's what Wall Street has to say about Tesla's earnings and revenue beat for the second quarter.
Colin Rusch, Oppenheimer (Perform, price target N/A)
"TSLA addressed a number of bear theses in its 2Q:17 call, notably guaranteeing production runrates for Model 3 (5k/week exiting 2017 and 10k/week in 2018), pointing to strong demand statistics, and guiding OpEx flat for 2H17. . . We believe the long-term thesis on TSLA depends on the successful launch of fully autonomous vehicles, but limited information is available on the progress being made nor on testing
results for Level 3-5 autonomy."
Joseph Spak, RBC Capital Markets (Sector Perform, $345 price target)
"What TSLA has accomplished is extremely impressive, but stock discounts that a lot goes perfectly and smoothly for a very long time. Near-term we would put wide error bands on forecasts and watch for self-funding. Mid-to-long term success depends on TSLA maintaining great brand which increasingly depends on autonomous, not electrification. PT to $345 on revised forecasts."
Robert Cihra, Guggenheim (Buy, $430 price target)
"While recognizing TSLA remains expensive on near-term metrics, we continue to value it on 2020E numbers, expecting the ramp of its new Model 3 to drive revenue and margin growth for several consecutive quarters, as volumes leverage off the high fixed-cost structure Tesla has been building. . . But we believe the big positive was Model 3 not only started production in July but Tesla is guiding the lower-priced car's gross margin already turning positive in Q4E, something we had not previously forecast until 2Q18E, toward a target in 2018 of 25%. . . Risks to our rating and price target for TSLA include TSLA's rich valuation; history of burning cash; execution in manufacturing, distribution, and service; highly-regulated markets; the still-small market for EVs; and competition from large incumbent automotive OEMs with deeper pockets and established scale."
Don't miss these Tesla stories on TheStreet:
- Tesla Employees Won't Talk to You About the Model 3 In Stores But They May Try to Sell You Solar
- Tesla CEO Musk: 'This is the Best I've Ever Felt About Tesla'
- Tesla CEO Elon Musk: I Just Felt Like Hell, but Am Now Feeling Awesome
- Tesla Will Need to Raise Cash, and Just Revealed How It Might Get It
- Tesla, Like Apple, Told Bulls What They Wanted to Hear About a Big New Product