Tesla shares are still up by almost 7% more than a day after the release of its second quarter earnings report that was better than most analyst expectations. The stock which was up by almost twenty-five points from $325 to more than $350 after the company posted lesser than expected losses for the quarter that ended last June.
From analyst expectations that the company would deliver a loss of $1.88 per share on a revenue of $2.51 billion, the company posted only a loss of $1.33 per share on a revenue of $2.79 billion beating most analyst forecasts. Despite the continuous losses, most investors were still impressed with the earnings results due to the growing demand and orders for the Model 3 vehicle which was officially launched last week.
The said vehicle which received more than 400,000 in pre-orders following its reveal during an event last year has been receiving a lot of attention in the past year. Aside from being the company’s most affordable vehicle yet starting at $35,000, the company also offers customization for the vehicle in the near future.
Tesla currently has an outlook of producing more than 1,5000 Model 3 units by September and eventually targeting 20,000 vehicles per month beginning this December. The current demand for the vehicle along with the recent earnings report has propelled Tesla’s stock price up due to the bright Model 3 outlook that would make the company one of the biggest in the industry.
Tesla chief executive officer Elon Musk believes that the Model 3 would drive the company’s profits higher in the coming periods and make Tesla one of the biggest automobile makers in the United States not just by market value.
Last Wednesday, the Palo Alto, California based company stated that the daily reservations for the Model 3 vehicles have reached almost 1,800 since its official launch last week.
For the quarter that ended last June, the company posted a cash on hand worth $3 billion while its cash spending has reached $2 billion sending some investors to place bearish bets on Tesla. However, the company is now expected to start cutting costs as the production of the Model 3 have begun or to start raising more funds this year before it ramps up its overall production by the end of the year.
Due to Musk keeping his promise to investors that the company would be promoting and creating a more mass consumer friendly vehicle, shares of the company have remained above the $300 level and have sustained a considerable stock price despite concerns regarding the lack of profitability the company offers along with its rising massive cash burn.
Tesla shares which have risen by 52.5% this year. Tesla’s margins are also expected to rise by 25% by next year.