Published: Thu, May 03, 2018
Finance | By Gustavo Carr

Seven things Wall Street wants Elon Musk to talk about today

Seven things Wall Street wants Elon Musk to talk about today

If there's a greater investor obsession at the moment than whether it will produce 5,000 or 6,000 or however many cars the analysts feel it needs to produce in a week to be successful financially; I haven't seen it.

Investors are finally pushing back against Tesla and its notorious chief executive, Elon Musk, who runs the company like his personal vision board.

Net reservations for the Model 3, including configured orders that had not yet been delivered, exceeded 450,000 at the end of the quarter, Tesla said.

Tesla CEO Elon Musk insists that there's nothing to worry about. But it's misleading to focus too much on quarter-by-quarter cash flow numbers.

One example: Musk said Tesla had a very complex robot created to put fiberglass mats on top of the Model 3's battery packs.

The California-based firm said that it made "significant progress" in ramping up production Model 3 vehicles considered key to its success in the mass market.

"Prior to a planned shutdown in mid-April to further increase production, we produced more than 2,000 Model 3 vehicles for three straight weeks, and we hit 2,270 in the last of those weeks", Tesla said in a shareholder letter late on Wednesday.

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"This is primarily based on our ability to reach Model 3 production volume of 5,000 units per week and to grow Model 3 gross margin from slightly negative in Q1 2018 to close to breakeven in Q2 and then to highly positive in Q3 and Q4". The Model 3 is priced against well-known competitors such as the BMW 3 Series, Mercedes C-Class, Lexus IS, and Audi A4.

"It's not like brain surgery to get these things right", Musk said on a conference call. This may be a hint that ties into another piece of information that he gave later in the call that all future Gigafactory sites would have vehicle production facilities built in, and that the company was working with the Chinese government on securing a location there.

Tesla posted a record $709.6m net loss in the first quarter and burned through $745.3m in cash while struggling to crank out large numbers of its Model 3 mass-market electric vehicle.

According to Re/Code, the company lost $710 million on $3.4 billion in revenue as it struggled to meet the production goals for its mass-market vehicle Model 3. That compares with a loss of $1.33 in the year-ago period. The company posted its biggest-ever quarterly loss Wednesday.

After-hours trading implied a loss of more than $2 billion dollars from Tesla's market capitalization by the end of the analyst call. It previously forecast spending of at least $3.4 billion.

Tesla burned through $700 million in cash last quarter. (As an official note, estimates that won't be accepted include "more than any other electric car" - we've figured as much by now - and "doesn't matter, since Tesla will be out of business by the end of the year" - come on, get over yourself). Moody's also warned that Tesla's liquidity is not enough to cover its 2018 discretionary capital expenditure expected at $2 billion as well as another $1.2 billion in convertible debt that matures early next year.

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