Besides Tesla (TSLA) missing bottom line forecasts -- posting a loss of $3.06 a share vs. estimates for a loss of $2.90 a share -- Tesla's report revealed three key concerns. But Wall Street chose to ignore them, sending shares up 9% in pre-market trading Thursday.
Concerns
Tesla burned through $1.5 billion in cash in the first six months of the year. Despite Tesla saying it's keeping a watchful eye on capital expenditures, it still only ended the quarter with $2.2 billion in cash. In other words, Tesla may have to raise money at some point this year to fund its business.
Tesla seemed to back off an earlier call of achieving profitability in the third quarter. "In the second half of 2018, we expect, for the first time in our history, to become both sustainably profitable and cash flow positive," Tesla said on its earnings press release. The company may be banking on a big fourth quarter.
Tesla said it will raise money to fund its new Gigafactory in China. Said Tesla, "Construction is expected to start within the next few quarters, though our initial investment will not start in any significant way until 2019, with much of it expected to be funded through local debt."
Despite the president's promise of no stimulus until after Nov. 3, there are no signs yet that this is the sort of correlated selling that leads to a deep correction.
Breaking down an approach to the long side of this biotech stock.
Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation.
If you have questions, please contact us here.
Email
Email sent
Thank you, your email to has been sent successfully.
