Tesla shares soar after adjusted Q2 earnings top forecasts

Shares in Tesla Motors Inc. soared to a new record today after the company's adjusted earnings topped analysts' expectations.

As of 2 p.m. eastern time, Tesla stock had gained 17 percent from Wednesday's closing price to $157.10. Earlier, the price reached a record $158.88. At least seven brokerages raised their price target for the company's stock — to as much as $187 a share, Reuters reported.

Three months after generating the first quarterly profit in its 10-year history, Tesla on Wednesday posted a $30.5 million net loss for the second quarter.

Revenue directly related to auto sales dipped sharply to $401 million in the second quarter from $555 million in the first quarter, the company said Wednesday in a statement. The drop in revenue reflected an accounting requirement that defers some revenue on vehicles financed through Tesla and its financial partners.

Total revenue fell to $405 million in the second quarter from $561 million in the first quarter.

A year ago, when Tesla was preparing to launch the Model S sedan, the company posted second-quarter revenue of $26.7 million and a $105.6 million loss.

Using generally accepted accounting principles, or GAAP, which is consistent with the way other automakers report financial results, Tesla said it lost $11.79 million from operations, before interest and taxes, during the second quarter.

On a non-GAAP basis, Tesla said second-quarter net income totaled $26 million, but added that the profits excluded special items such as stock-based compensation, the impact of lease accounting, the change in fair value related to Tesla's warrant liabilities, non-cash interest expenses and one-time expenses associated with the early repayment of its Department of Energy loan.

With $100 million in gross profit, on a non-GAAP basis, the company said it produced a gross profit margin of 22 percent. The automaker expects its gross profit margin to reach 25 percent by the fourth quarter.

The company's second-quarter gross profit excludes r&d expenses, and sales and administrative costs. With those outlays included, Tesla said it posted an operating loss of $12 million during the second quarter.

On a non-GAAP basis, Tesla reported a profit of 20 cents a share. Analysts surveyed by Thomson Reuters expected Tesla to report a loss of 17 cents a share on $383 million in revenue.

Tesla said it delivered 5,150 cars during the second quarter, surpassing a company estimate of 4,500 deliveries.

Tesla continued to benefit from the sale of zero-emissions credits to other automakers. It sold $51 million worth of ZEV credits in the second quarter, as well as $18 million in "other regulatory credits." In the first quarter, Tesla traded $67.9 million in ZEV credits, as well as $17.1 million in other regulatory credits.

Fighting bottlenecks

In a conference call with analysts Wednesday, Tesla CEO Elon Musk said the company is fighting some supply-chain bottlenecks, which he hopes to have cleared by this time next year.

Musk said "about 90 percent" of the company's suppliers will be able to ramp up to Tesla's production targets, but most of the others will "have some difficulty" in ramping up, "and some just can't."

"You can't give people a car that's 99 percent complete," Musk said. "Some suppliers are not set up for volume production. We're striving to become demand-limited, rather than production-limited."

Tesla expects to continue selling about 5,000 units a quarter in the second half.

The company said it began sales in Europe this week with a healthy order bank. Initial sales in Europe will be weighted toward the more expensive 85kW Model S model, which should help revenues, the company said.

In the closing notes of a letter to shareholders Wednesday, Musk noted that Tesla expects to spend about $150 million in the second half on capital expenditures, including the purchase of 31 acres adjacent to its Fremont, Calif., factory.

In commenting on the land purchase, Musk also teased at a long-term maximum volume goal for the automaker.

"Buying that land makes it easier for us to achieve that 500k number," Musk said.

Previously, Tesla had mentioned peak volumes well below 500,000 units.

However, the new forecast may signal the company's outlook and targets for the Tesla Gen III compact sedan that arrives in late 2016 or early 2017.

"We are also continuing to invest in our sales and service infrastructure," Musk wrote in the letter to shareholders. "All these investments, funded in part by our profitable operations, position us for further expansion of our product portfolio and growth globally."

Cash outflows from operations were $38 million during the quarter, Musk said in the letter to shareholders. Tesla raised more than $1 billion in equity and debt in May and paid off the balance on a $440-million U.S. government loan.

It said it closed the quarter with $746 million in cash — reflecting funds raised by the equity offering — up from $214 million at the end of the first quarter and $210 million a year ago.

Tesla said it expects to post operating profits and generate cash every quarter in 2013, excluding sales of green-car credits to other automakers.

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