Tesla's Elon Musk defends comments during earnings call

Blanche Robertson
May 5, 2018

While Tesla is seen by most as a "story stock" - meaning that its value is mostly linked to its future potential and all the products in its pipeline rather than its current financial results, historically, Tesla had its biggest stock price increases after reporting a profit. "The truth is you're not a real company until you are, frankly".

"We're going to YouTube", the CEO said, turning to questions from users of the video sharing site. The company did reduce its 2018 capital expenditure guidance to under $3 billion from $3.4 billion in 2017. The spat comes at a crunch time for Tesla, when it is struggling to ramp up production of its Model 3 sedan, on which its profitability depends. Referring to the call and Musk's behavior, Adam Jonas of Morgan Stanley stated that it was the most unusual call in his experience of 20 years of taking earnings conference calls. That's also the level needed for Tesla to make money.

Elon said making affordable electric cars in China could only be done with a factory in China. Some of that will likely be due to planned spending cuts on machinery, equipment and other capital expenses. We caution, however, that euphoria over Model 3 accomplishments may be short-lived because there are many growth projects still needing investment.

"After achieving a production rate of 5,000 per week, we will begin offering new options such as all-wheel-drive and the base model with a standard-sized battery pack", the company said.

Tesla says it won't come to that.

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"We've also found that there are some things that are very well suited to manual operation and some things that are very well suited to automated operation, and the two should not be confused", Musk said in reference to automation.

Tesla posted a record $709.6 million net loss in the first quarter, which amounts to a loss of $4.19 per share.

Tesla stock did rise a bit on Friday, getting a 3.82 percent bump to $295.31 per share at the time of publishing. Revenue grew by 26 percent from a year ago to $3.4 billion. Analysts polled by FactSet expected an adjusted loss of $3.54 per share.

Tesla CEO Elon Musk took to Twitter Friday morning to once again confront skeptics of his company. The company expects to take in more cash than it spends in the second half of this year. The company has had just two positive quarters since it became a public company in 2010.

Tesla's market capitalisation of $51 billion exceeds that of Ford, which posted revenue of $156.7 billion past year versus Tesla's $11.8 billion.

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