Tesla Shares Pressured on Sales Projections and Financial Warning

Andrew Klips  |

Shares of electric car maker Tesla Motors, Inc. (TSLA) are seeing red this morning as a SEC filing details a slower ramp in production than previously expected and a possible share sale to raise funds. According to the regulatory filing, Tesla said it has “methodically increased our Model S production at a rate slower than we had earlier anticipated” and believes it “will be approximately four to five weeks behind our previously announced Model S delivery goals as of the end of 2012.”

The company expects 2012 revenue to fall into the range of $400 to $440 million and third quarter revenue to tally between $44 and $46 million as a result of lower vehicle deliveries. Wall Street was expecting sales more to the tune of $83 million for the quarter and $540 million on the year.

The luxury electric car maker anticipates producing over 300 vehicles in the third quarter and to accelerate production to 400 vehicles per week in the fourth quarter which will allow it to meet its goal of manufacturing more than 20,000 Model S vehicles in 2013. Tesla also said it has about a six month backlog for its new Model S reservations and that the third quarter has been the strongest quarter yet for new Model S reservations.

Subscribe to get our Daily Fix delivered to you inbox 5 days a week

To that end, the slower-than-expected production during Q3 may be surmountable if the fourth quarter objectives are met, but a bigger concern may be corporate finances.

Tesla also announced an offering of an additional 4.34 million common shares to raise up to $150 million for “general corporate purposes.” Founder and CEO Elon Musk is interested in buying up to $1 million of the stock sold at the offering terms, according to the Palo Alto, California-based company.

Further, Tesla amended its loan agreement with the U.S. Department of Energy – to not include financial covenants of a minimum ratio of current assets to current liabilities amongst other changes - and cautioned that it may need to do it again if it can’t raise the necessary money from a share sale. The loan facility, which began in January 2010, has already been amended three times previous to this latest adjustment to keep Tesla in compliance.

“We currently anticipate that without raising capital in addition to this offering, we would need to seek an amendment from the DOE to modify the total liabilities to stockholder equity covenant for the quarter ending March 31, 2014 and the two subsequent quarters,” the company said in the filing.

Shares of TSLA dropped as low as $25.70 in pre-market traded, and as low as $27.80 in early trading.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.


Symbol Last Price Change % Change