Tesla logs 11% drop in shares after publishing dismal Q1 2014 results

Article by Andrew Christian, on May 10, 2014

Tesla Motors Inc. saw its shares drop 11-percent on May 8, 2014, to $178.59 after disclosing that it made a loss in the first quarter of the year. The carmaker also disclosed that supplies of the lithium ion batteries that power its Model S sedans will be tight until the second half, which means that production of the electric vehicle will be limited until the issue is resolved.

Brian Johnson, a Barclays Plc analyst, said in a report that investors had “grown accustomed” to Tesla providing delivery guidance that exceeds expectations, noting that such trend was broken for the second quarter. Johnson remarked that Tesla’s lower sales forecast might put its stock “in the penalty box in the near term.” Johnson rates Tesla the equivalent of a hold.

Tesla said that it delivered 6,457 Model S sedans in the first quarter of 2014, up from around 4,900 in the same period in 2013, topping average of seven analyst estimates. Deliveries, however, failed to top the highest forecast of 6,000 units.

According to chief executive Elon Musk, sales were limited by tight supply of lithium cells for Tesla batteries, which won’t be resolved until the third quarter. Tesla is expecting to deliver around 7,500 cars in the second quarter of 2014, which is below Johnson’s estimate of around 7,800.

Tesla is currently looking for possible location for what it dubs as “gigafactory,” which is huge plant that would trim battery costs by 30 percent. Tesla has named Arizona, Nevada, New Mexico and Texas as possible locations.

Main battery supplier Panasonic Corp. has inked a letter of intent to join the “gigafactory” project, Tesla recently disclosed. JB Straubel, Tesla’s chief technology officer, remarked that the parties may be heading to a final agreement sometime later this year.

Musk quipped that the facility’s groundbreaking could commence as early as June. Tesla said it will break ground in at least two states. Musk remarked that while California could be another option, its selection is “improbable.”

Topics: tesla, shares

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