Following the losses Tesla shares incurred last Wednesday after a disappointing third-quarter earnings report, the American electric automaker further suffered losses to its shares after the Republican Congress unveiled their proposed tax reform cut that will repeal the current credit worth $7,500 given to electric vehicles per unit.
The company’s shares slumped by almost 5% during the previous trading session following a weak earnings report as well as an announcement from the company’s chief executive officer Elon Musk that the company would not be able to meet its own targets for the deliveries and production of the mass-market Model 3 vehicle which is currently Tesla’s most in-demand vehicle due to its affordability.
The vehicle which is being sold at a starting price of $35,000 originally was forecasted by the company that around 5,000 units would be produced will not be able to be completed this year as they have stated before. Their target of 5,000 Model 3 units will now be produced during the first three months of 2018. Although most investors and analysts did not expect the company to meet its ambitious production targets, the company’s production of only a hundred couple of vehicles for the stated period disappointed investors further.
For their third quarter earnings, Tesla delivered an adjusted loss of $2.92 per share. A slight improvement compared to expectations from analysts that the company will post $2.23 per share in losses. Tesla’s revenue also beat most expectations with their quarterly revenue reaching $2.98 billion for the quarter compared to most estimates of $2.39 billion. Tesla’s cash flow for the third quarter grew more than expectations of $1.2 billion compared to their cash flow of $1.4 billion for the quarter.
During the past month, Tesla also disappointed analysts and investors after it posted their production numbers for the Model 3 which was only 260 units for the past couple of months which was way below their original targets of 1,500 vehicles. Tesla CEO stated that this was due to bottlenecks in their production.
One trading session following the weak earnings report, Tesla shares declined further as the markets digested the earnings results as well as a statement from the company regarding their weak production numbers. Analysts are now expected to focus more on Tesla’s production capability and numbers which may become more of an issue as Tesla currently plans to reveal and release more vehicles. Later this month, Tesla is expected to unveil its electric semi-truck which was set originally for a public reveal last month.
Join the best forex broker and follow us for more up to date news and latest stock market news.