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Tesla Shares Down on Cost Concerns Following Q1 Earnings Report

by Todd Haselton | May 7, 2014May 7, 2014 8:00 pm PST

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Tesla released its first quarter 2014 earnings on Wednesday, reporting a $17 million profit during the quarter, 12 cent earnings per share (EPS), beating Wall Street expectations of 10 cents EPS. The company also said it produced a record number of Model S cars during the quarter and is still on track to deliver more than 35,000 vehicles during for the year.

In total, Tesla delivered 6,457 Model S vehicles during the quarter, slightly fewer than it did during the fourth quarter of 2013. However, Tesla produced a record 7,535 cars, which means it has some leftover supply for the quarter. Net orders in North America increased 10 percent during the quarter, though Tesla is still running into some problems with direct-to-consumers sales, in states like New Jersey. Tesla said it is continuing its fight to gain approval to sell direct.

The automaker said that part costs are set to improve and that it’s still aiming for a 28 percent non-GAAP gross margin by the fourth quarter of this year. Still, Market Watch believes expansion costs are scaring investors away. Tesla said that operating expenses during the second quarter are expected to increase about 30 percent for research and development, while selling, general and administrative costs (SG&A) will increase about 15 percent.

In total, capital expenditures are expected to fall between $650 million and $850 million, though much of that will be shuttled into the company’s efforts to build its new Gigafactory, increase the output of the Model S and start production of the new Model X.

All of this is taking a toll on shares of Tesla Motors. Despite beating Wall Street expectations, shares of Tesla were down about 7.4 percent in after hours trading.

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Todd Haselton

Todd Haselton has been writing professionally since 2006 during his undergraduate days at Lehigh University. He started out as an intern with...