Tesla stock slides even as CEO Musk pledges to meet year end target
Tesla reported a smaller-than-expected quarterly loss on Wednesday, pledged to fix production issues and said it would stop burning through cash by later this year.
The company's stock initially rose -- but then fell sharply as analysts on a conference call questioned CEO Elon Musk on costs and production. Shares were down more than 5 percent after-hours.
Tesla has been wrestling with two key issues: How fast it can produce its latest Model 3 and its cash position.
On the conference call, CEO Elon Musk said he was focused on the Model 3 and bringing Tesla to profitability as soon as possible. "Our focus is on the Model 3, we need to become a profitable company -- that is a good criticism that has been leveled at Tesla," Musk said. "The truth is you're not a real company until you are. That's our focus right now."
The company estimated that 5,000 Model 3s will be rolling off the assembly line in "about two months." That was consistent with public projections Musk had earlier made in an interview with CBS News last month.
Tesla also indicated that it expects to meet the stated year-end delivery target of 100,000 for the Model S and X deliveries.
Tesla lost $709 million in the first quarter. At the end of the period, Tesla had $2.7 billion in cash, $700 million less than the start of the quarter.
In March, Moody's Investors Service downgraded Tesla's debt. "The negative outlook reflects the likelihood that Tesla will have to undertake a large, near-term capital raise in order to refund maturing obligations and avoid a liquidity short-fall," Moody's analysts said in the note.
A capital raise is a "question of when, not if," UBS analyst Colin Langan told clients recently, citing the company's aggressive growth strategy.
The company said in a statement last month that it does not need to raise capital. "Tesla does not require an equity or debt raise this year, apart from standard credit lines," the company said.
Tesla has faced operational problems, with shipping delays and slow production of its Model 3 sedan. The car, which at $35,000 to around $50,000 is more affordably priced than the manufacturer's other vehicles, is Tesla's first effort to crack the mainstream consumer market and so is considered vital to its success.
Such setbacks have dimmed Tesla's outlook on Wall Street. As of the close of trading on Wednesday, its stock was down about 5 percent this year. Short-selling of the shares -- bets the company's stock will fall -- on the rise through April 13, according to Nasdaq data.