Economy

Tesla's Q3 Earnings: The Bull-Bear Debate (NASDAQ:TSLA)

Tesla's Q3 Earnings: The Bull-Bear Debate (NASDAQ:TSLA)

Although the SEC and the DOJ often coordinate on investigations such as this, the SEC's recent civil actions against Musk and Tesla related to the CEO's tweets claiming that he had "funding secured" to take the electric-car manufacturer private, not the company's statements relating to the production rate of Model 3 vehicles.

Tesla has already been forced to build a production line in a tent at its California factory to expand Model 3 production. Tesla also posted $52 million (£40.5 million) from the sales of regulatory tax credits and $23 (£17.9) million in other income. "We do not intend to raise equity or debt, at least that is not our intention right now".

The vast majority of cars traded in by Model 3 buyers are non-premium models priced new at less than $35,000.

Earlier this year, Tesla received a voluntary request for documents from the Department of Justice about its public guidance for the Model 3 ramp and we were cooperative in responding to it.

If Tesla cuts capital expenditures, research and development on upcoming vehicles or new hiring, investors will ask whether that reflects improving efficiency or delay of necessary spending.

Tesla shares closed higher for the sixth time in the past ten trading sessions on NASDAQ on Thursday. If it can't, and that goes for all the companies listed above, it could leave investors quite disappointed down the road. Citigroup downgraded shares of Tesla from a "neutral" rating to a "sell" rating and reduced their target price for the stock from $356.00 to $225.00 in a report on Friday, September 28th. Strong demand for pricier all-wheel-drive and high-performance versions of the Model 3, plus Tesla's plan to start selling the auto in Europe early next year, should support profit margins, he wrote in an email. The best outcome for Tesla was not just being able to turn a profit in the 3rd quarter, but the company has stopped burning through its cash.

More news: Saudi Arabia now says Khashoggi murder 'premeditated'

He expressed confidence that Tesla would remain profitable, despite using cash to pay off notes. At the same time, Model 3 deliveries to Europe would begin in late February or March next year, while deliveries to China - during Q2.

But now, Tesla has mentioned, "It has provided enough information to the Department of Justice regarding the Elon Musk's public statements regarding the numbers of Tesla Model 3 sedan too".

Third quarter materially de-stresses Tesla's balance sheet and could support more leverage if the company can demonstrate more than one quarter of healthy free cash flow generation and sustained demand for Model 3. It didn't hit that level of production until the end of June 2018.

Strong third quarter across the board helped by Model 3 mix.

In order to increase the affordability of the Model 3, Tesla accelerated its manufacturing timeline in China.

But the major difference between the three service is that Musk's platform, dubbed the Tesla Network, would be entirely made up of autonomous cars.


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