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Even with Bigger Than Expected Loss, Tesla Stock Surges

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Tesla stock traveled north for more than 9 percent during extended hours of trading on Wednesday. The market behavior is conflicting since Elon Musk’s company earlier announced a record loss of $742 million, including $717 million attributable to common shareholders in the second quarter this year.

The loss, though, doesn’t seem unendurable when compared to Tesla’s previous quarter’s financial performance. It reported negative $785 million as total revenue, along with $710 million of that attributable to shareholders during 2018 Q1.

Despite the bold negative line in the company’s financial statement, the investors cheered with Tesla this time. They could envisage the electric company’s positive growth rate and energy to fulfill “huge” commitments.

Substantial Efforts of Tesla

Teslatotal revenue grew to $4 billion in the 2018 Q2 from $3.4 billion earned in the last quarter. In addition, the company was also able to accomplish the goal of delivering 5000 Model 3 models per week.

In the second quarter of this year, the commercial electric automaker manufactured total 53,339 vehicles. Plus, it delivered 22,319 Model S and Model X models, coupled with 18,449 Model 3 cars, cumulating to 40,768 deliveries.

“We are proud of our team for producing roughly 7,000 Model 3, Model S and Model X vehicles during the last week of June,” cited in a statement.

Augmenting the efforts, the company produced about 5000 Model 3,mid-sized sedan per week “several times” in July, together with manufacturing 2000 Model S and X per week.

Elon Musk now aims to reach the capacity of producing 6000 Model 3 cars per week by late August and further during later quarters. Musk quoted to manufacture 50,000-55,000 Model 3 sedans in the third quarter.

Not to mention, Tesla’s ultimate ambition is to deliver 100,000 Model X and Model S this year.

Trade Disruption From China

During the second quarter’s earnings call, Tesla also discussed hampered trade relationship with China. In order to offset the heavy import duties on US vehicles (40 percent) in China, Elon Musk tried to off-set it by decreasing the electric vehicle price in the nation.

Though, the decision would allegedly affect the company’s revenue expectations and volume demands from China in the near future. Tesla is all set to divert the focus on North America and Europe if need be.

Model 3 Market Share

The automobile revenue of Tesla soared 23 percent in June quarter when compared to Q1, thanks to massive deliveries of Model 3 cars. Even the gross margin for Model 3 turned minor positive in Q2, providing an estimation of 15 percent growth in the current quarter.

Acknowledging the green auto initiative, Tesla Model 3 holds the biggest share in the US mid-sized sedan market. The electric car accounted for 52 percent of the overall segment against all other premium sedans combined, which likes of BMW 3 Series, Audi A4, Mercedes C Class, Lexus I5 and Jaguar XE.

That Gigafactory in China

Last month Tesla announced to set a wholly-owned Gigafactory 3 in Shanghai, China, its first mega plant outside the USA. The decision is based on the huge market opportunities available for electric vehicles in China.

The initial capacity of Gigagactory 3 will be to roll-off approximately 250,000 vehicles and battery packs annually, which will eventually expand to 500,000.

Elon clarified that the construction of Gigafactory will be financed by local debt instead of raising it through equity.

Hopes of Nearing Profit

Musk confidently reiterated the guarantee of securing a profit in the second half of this year: "Our goal is to be profitable and cash-flow positive for every quarter going forward."

The commercial electric vehicle pioneer ended the second quarter with $2.2 billion in cash and cash equivalents. The company projects this to grow in Q3 and Q4.  Correspondingly, its capital expenditure dropped from $655 million to $610 million in three months ended on June 30.

Tesla Infotainment

Before announcing quarterly results, Musk tweeted about Tesla v9.0 software update which will also include Atari Games as Easter Eggs treat. The twitter community went crazy over the news. The upgrade will release as soon as in about four weeks. Also, v9.0 features improved autopilot mode and dash cams.

The CEO is hopeful to add “Tempest,” “Missile Command,” and “Pole Position” to the upcoming v9.0 update. In fact, it appears like Musk would actually link the car steering to Pole Position so that the drivers/players can use it like a controller of the game(of course, when the car is stationary).

He has invited the game developers to design video games that “integrate with a center touch screen, phone & car irl”.It’s a clear indication that more games are coming to the leading electric vehicles soon.

In another tweet, he informed that Tesla is already adding a “party & camper mode” to Model S, Model 3 and Model X. “So your car can maintain airflow, temp, selective lights, music & power devices for 48 hours or more while parked. Big batteries rock”.

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