Tesla share price: 3 things we learnt from Q1 results

The car company's stock drops after a lackluster Q1 earnings report.

Elon Musk after Tesla Q1 earnings Source: Bloomberg

Tesla share price is down after a worse-than-expected Q1 revenue report. Three main facts stood out after Tesla’s Q1 earnings report.

Tesla reported large losses

Tesla’s Q1 revenue was $4.54 billion, less than the projected $5.19 billion. Tesla’s Q1 profits dropped after chief executive officer, Elon Musk, reported that the company posted a $700 million loss. As a result of Tesla’s staggering losses, Musk said he is open to raising capital to pay off the corporation’s remaining $180 million in debt.

‘There’s merit to the idea of raising capital at this point. This is probably about the right timing,’ said Musk.

Piper Jaffray analyst, Alexander Potter, said a number of factors affected Tesla’s Q1 earnings.

‘First-quarter[profits] suffered from a particularly nasty combination of headwinds, including seasonality, a big buildup of non-U.S. deliveries (negative for logistics costs and working capital), as well as the expiration of tax incentives in the United States,’ said Potter.

Tesla car sales were disappointing

Tesla’s Q1 earnings drop was likely caused by lackluster sales of the company’s vehicles. Though sales increased overall to $3.72 billion, they still lagged behind Q4 2018 purchases.

Even though Tesla announced an affordable new vehicle, the Model 3, the car’s price increased, it shipped later than expected, and isn’t available for sale online as earlier promised.

Despite the slow sales for the cars, Musk said that Tesla will introduce self-driving ‘robotaxis’ in 2020. The autonomous vehicles would compete with other ridesharing cars from Uber or Lyft.

‘I feel very confident predicting autonomous robotaxis for Tesla next year,’ said Musk.

Tesla will offer an insurance product

In addition to the robotaxis, Tesla said it will be offering an insurance product starting next month. Though Musk gave few details about the product, Musk said that the product will be based on its current Autopilot system that assists drivers. The Autopilot program’s safety information is already shares with insurance company to set rates.

‘As we launch our own insurance product next month, we will certainly incorporate that information into the insurance rates,’ said Musk.

Tesla’s share price likely tumbled after the discouraging news about its car sales and debt. Tesla’s Q1 earnings will likely tell investors that Tesla had a challenging Q1 revenue report.


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