Tesla Updates: First Quarter Earnings Reported an Enormous Drop

In Tesla’s first quarter, it made a huge step back in its way into making sustainable profits. For the period, free cash flow was negative $920 million, and $702 million GAAP loss reported by Tesla. Aside from that, the cash reserves of the company dropped $1,5 billion sequentially.

Aside from the listed financial crisis this quarter, vehicle deliveries also faced a 31% drop. These reports alarmed the investors.

CEO Elon Musk is still hopeful for the demand for vehicles despite the first quarter’s gloomy deliveries. “We do see strong demand for vehicles,” the CEO said.

In addition to that, the CEO mentioned that Tesla is getting past the overhang of the tax credit cliff. This points in the fourth quarter of 2018 where the demand for vehicles increased rapidly. The reason for that was the first scheduled reduction in the federal electric-vehicle tax last Jan. 1, 2019. From $7,500, the credit chopped to $3,750 for Tesla buyers.

After the company developed Model S and X with a new drivetrain, providing them substantially more driving range on a single charge, the demand for the vehicles rose a little. Musk expects the demand for Model S and X will deliver the 100,00-unit annualized rate.

Tesla anticipates a demand growth that can reach 360,00 to 400,000 deliveries this year. And the growth of about 45% to 65% yearly.

Chance of Tesla’s Rebound

Investors clearly didn’t expect the loss of Tesla. Analyst assumed the company’s net loss is only $0.69 per share. In last week’s report, Tesla’s net loss of $4.10 per share.

However, Musk is certain that in the second half of 2019, the company will bounce back to its solid profitability. At least 111,000 vehicles per quarter must be delivered in the second half of 2019 to reach the goal of Tesla (360,00-400,00 deliveries).

Investors seem worried about the half-baked assumptions for the rest of the year.