Tesla’s second-quarter earnings fall short of Wall Street expectations

Tesla on Wednesday reported second-quarter earnings that fell far short of Wall Street’s expectations, sending the company’s stock price down as much as 10%, or $27, in after-hours trading.

Here are the important numbers:

• Earnings: -$1.12 per share versus -$0.31 expected
• Revenue: $6.35 billion versus $6.45 billion expected

“This quarter, we are simplifying our approach to guidance. We are most focused on expanding our manufacturing footprint in new regions, launching new products and continuing to improve the customer experience, while generating and using cash sustainably,” the company said in a letter to shareholders.

Tesla’s stock price fell as much as 10% in after-hours trading following the earnings release.

As it previously said, the company is still targeting a return to profitability in the third quarter.

“We expect positive quarterly free cash flow, with possible temporary exceptions, particularly around the launch and ramp of new products,” it said. “We believe our business has grown to the point of being self-funding.”

Gross automotive margins, expected to be around 17%, were roughly 19%, the company said.

“The Model 3 average selling price (ASP) was stable at approximately $50,000,” the company said, while costs continue to decline.

The company said it ended the period with $5 billion in cash, “the highest level in Tesla’s history,” it said.

Tesla also reduced its estimated capital expenditures for the full year to between $1.5 billion to $2 billion.

“We continue to find opportunities to improve capital efficiency and shift cash outflows to future periods,” the company said. “This estimate includes the development of our main projects, on the timelines referenced, and to expand our Supercharger and service networks.”

The company previously released its production and delivery numbers for the quarter in June, which set a new record. In the three-month period from April through June, the company produced 87,048 cars and delivered 95,200.

Read more: Layoffs, SEC battles, and Elon Musk’s tweets: 2019 looks like another chaotic year for Tesla

In April, Musk unveiled a new autonomous-vehicle strategy for the company. The company plans to have 1 million robo-taxis powering a network of autonomous vehicles by 2020, Musk said. Doubling down on that goal, Musk told investors on a conference call hosted by Goldman Sachs in May that, if successful, the Tesla Network could make the company worth $500 billion — more than 10 times its current market value, CNBC reported.

Heading into the the conference call, scheduled for 3:30 pm California time, analysts said they had questions about continuing strategy given the company’s recent capital raise.

“We will be looking for some greater detail around potential capital efficiencies that are leading to such significant revisions,” Christopher Eberle, an analyst at Nomura Instinet, said in a note to clients.

“Further, we expect investors may question the continued deceleration in investment given that the company recently completed a capital raise and is in the midst of an aggressive global expansion of its manufacturing footprint,” he said.

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