Tesla shares rose on a narrower-than-expected loss on Wednesday as the electric car maker made gains in Model 3 production in April.

Here’s how the company did compared with what Wall Street expected:

• Adjusted loss per share: -$3.35 per share vs. -$3.58 per share forecast by Thomson Reuters
• Revenue: $3.41 billion vs. $3.22 billion forecast by Thomson Reuters

In the quarter ended March 31, Tesla’s net loss widened to $784.6 million, or $4.19 per share, from a loss of $397.2 million, or $2.04 per share, a year ago.

Excluding items, Tesla lost $3.35 per share, which was narrower than the loss of $3.58 per share a year ago.

Revenue rose to $3.41 billion from $2.7 billion a year ago, and outpaced analysts estimates of $3.22 billion.

Tesla ended the first quarter with a cash balance of $2.7 billion.

“If we execute according to our plans, we will at least achieve positive net income excluding non-cash stock based compensation in Q3 and Q4 and we expect to also achieve full GAAP profitability in each of these quarters,” Tesla said in a letter to shareholders.

That assumes Tesla can increase Model 3 production volume to 5,000 units per week and grow Model 3 gross margin “to close to breakeven” in the second quarter then to “highly positive” in the third and fourth quarters, the company said. “Ultimately, the growth of Model 3 and the profit associated with it will help us accelerate the transition to sustainable energy even faster.”

A change in Tesla’s accounting makes it impossible to directly compare Tesla’s year-over-year and quarterly numbers, including automotive revenue and gross margins. The company is now required to report lease transactions as sales, with all the revenue, income and costs for each lease recorded at once, rather than in monthly increments over the term of the lease.

“Now they are basically listing more of their leases as direct auto sales, and if you look at the difference between the margins of the leases and the automotive sales, in 2017, lease margins were 36 percent and automotive sales margins were 21 percent,” said Vertical Group analyst Gordon Johnson on CNBC’s Halftime Report on Wednesday. “So we think there is going to be a hit on the automotive margin line.”

In April, Tesla revealed that it had missed its first-quarter production and delivery targets for the Model 3, an electric sedan with a base price of $35,000. Tesla produced 2,020 Model 3s in the final week of the first quarter, short of its goal to produce 2,500 Model 3 sedans weekly by the end of March.

Tesla aims to increase the Model 3 production rate to 6,000 cars in a single week by the end of June, by running its Fremont, California, factory around the clock, according to a leaked email that Elon Musk sent to employees. Adding shifts, employees and paying more overtime have added costs for Tesla at a time when it is also promising to produce new vehicles including a new Roadster, Model Y and an all-electric semi truck.

Even so, Musk said on Twitter in mid-April that Tesla would be both cash-flow positive and profitable in the second half of 2018. Tesla has had only two profitable quarters since it went public in 2010. The company has also repeatedly missed deadlines and production targets.

Source: Tech CNBC
Tesla shares rise as first quarter earnings beat