On the one hand, Tesla’s results and the outlook for 2019 were not too bad. But it’s automotive segment — which still accounts for the majority of Tesla’s business — just didn’t reach the profit expectations some investors were anticipating.
This is the first time since the company went public that it has managed to have back-to-back profitable quarters. Tesla CEO Elon Musk said last year that he expected Tesla to be sustainably profitable beginning in the third quarter of 2018, which is just what has happened.
In a letter to investors on Wednesday, Tesla said it expects to deliver 360,000 to 400,000 vehicles in 2019, for an expected growth rate of between 45 percent to 65 percent compared with 2018. Tesla also noted it expects to see profits in each quarter of 2019, reports the Associated Press.
Tesla shares rose 3.8 percent during the regular session, fell about 2 percent in after-hours trading.
Earnings hit on several fronts
Tesla cited several issues that impacted its earnings, according to CNBC, including a decline in revenues from the sale of regulatory credits, higher import duties for parts coming in from China, as well as the lower cost of the Model S and Model X in China, and the lower priced “mid-range” version of the Model 3.
“Last year was definitely the most challenging year in Tesla history, but also the most successful,” Musk told analysts on a conference call.
“The $2,000 price cut and talk about having to lower cost further as federal tax incentives subside confirms our view that the bulk of demand is at a lower price point that Tesla can’t access yet profitably,” RBC Capital Markets analyst Joseph Spak wrote in a recent note to investors.
Here’s how the company did, compared with what Wall Street expected:
Adjusted EPS: $1.93 versus $2.20, according to average estimates compiled by Refinitiv
Revenue: $7.23 billion versus $7.08 billion, according to average estimates compiled by Refinitiv
Tesla CFO Deepak Ahuja is leaving
This afternoon, Elon Musk announced Tesla’s long-time chief financial officer, Deepak Ahuja, is retiring from the company after almost 11 years. This is still a developing story. Musk announced the news at the end of his conference call with investors.
This is the second time Ahuja has decided to leave the company. Tesla’s longest-serving executive first left in 2015. Ahuja rejoined Tesla in 2017, replacing then-CFO Jason Wheeler, who abruptly resigned. according to CNBC.
Tesla’s finance team has seen a high turnover in the past year with one chief accounting officer, Dave Morton, spending less than a month at the company.
