Shares of Tesla Motors Inc. (Nasdaq:TSLA) fell more than 5 percent to $255 in after-hours trading Wednesday, after the Model S luxury electric car manufacturer backed away from its annual sales forecast. The Palo Alto, California, carmaker released tepid second-quarter earnings performance and said it will sell fewer cars than expected in 2015.
“When you’re priced for perfection you have to deliver for perfection,” said Standard & Poor’s equity analyst Efraim Levy, referring to Wall Street's immediate reaction to Tesla's forecast adjustment.
Tesla said in its letter to shareholders that it expects to deliver between 50,000 and 55,000 vehicles this year, a downgrade from a previous estimate of “approximately 55,000,” the company said it would deliver in its first-quarter letter. Because Tesla isn’t expected to turn a profit for years, sales growth is critical.
“We do think it’s going to be quite a challenging production round on the [Model] X, and we only want to deliver great cars,” CEO Elon Musk said during a conference call Wednesday. “We don’t want to drive to the number beyond our ability to deliver high-quality vehicles.”
Tesla reduced its production estimates for next year from an average of about 2,000 vehicles a week to 1,600 to 1,800 vehicles a week.
Tesla said it still expects to deliver the first Model X sport utility vehicles to customers by the end of September and that it produced a record 12,807 cars in the three months ended June 30. “Since Model S and Model X are produced on the same general assembly line, Model X production challenges could slow Model S production,” said the letter to shareholders.
Tesla Motors reported an unadjusted loss of $184 million, or $1.45 per share, for the three months ended June 30, compared to a loss of $61.9 million, or 50 cents per share, in the same period last year. Analysts polled by Thomson Reuters has forecast an unadjusted loss of $126.1 million, or $1.02 a share.
The company reported $1.20 billion in revenue for the quarter, up from $857.5 million in the year-ago quarter. Analysts had expected about $1.18 billion.
The company ended the quarter with $1.15 billion in cash and cash equivalents, and spent $359 million in the quarter. Most of the cash burn had to do with retooling the Fremont, California, factory to accommodate Model X manufacturing.