Tesla Motors Inc Chief Executive Elon Musk on February 10 promised investors that the electric luxury car maker would stop burning cash and start making money this year, sending the company's shares up sharply despite a wider fourth-quarter loss.
Tesla shares rose more than 10 percent in after-hours trading after the company forecast a 60 to 80 percent increase in vehicle sales this year and promised it would turn a profit on an adjusted basis.
However, the company's stock is still down more than 30 percent since the beginning of the year, reflecting investor concerns about continued losses. Musk and the company's new chief financial officer, Jason Wheeler, used a conference call to assure investors that Tesla is determined to cut costs, hit production targets and stanch losses.
Musk said Tesla would generate positive cash flow even after investing $1.5 billion to add capacity to a huge battery factory in Nevada, and start producing battery cells there. "Moderate GAAP profitability is expected in the fourth quarter," Musk wrote in a letter to shareholders. GAAP refers to the generally accepted accounting principles that govern how listed companies report results. Tesla's cash reserves dropped to $1.2 billion as of December 31 from $1.9 billion a year earlier, despite a sale of shares last summer. The company's cash burn has become a concern for some analysts, given the heavy capital spending it has mapped out.
Tesla shares rose even though it reported a wider fourth-quarter net loss of $2.44 a share, compared with a loss of 86 cents a share a year earlier. Deliveries of Model S sedans and Model X sport utilities were 17,478 vehicles in the quarter, at the low end of prior forecasts. Revenue rose nearly 27 percent to a record $1.21 billion. "You cannot bet against Elon Musk," said analyst Ivan Feinseth of Tigress Financial Partners.
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