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Can Tesla weather the many controversies and still hit its sales goals? We’re about to find out.
Early next week, Tesla will report how many cars it produced in the third quarter and how many cars it actually delivered to customers.
Three months ago, investors and Tesla fans alike were waiting to see whether the company could meet its long-promised goal of producing 5,000 Model 3 cars in a week. It just met that target, adding 5,031 people in the last week of June.
Experts say the third-quarter production report is more important for the company and its future. It will show whether production levels at the end of the second quarter are short-lived or sustainable.
“The idea of continuous production is much more important than production sprints during the week,” said Jeremy Acevedo, manager of industry analysis at Edmunds. “The difference between $5,000 a week and $20,000 a month is huge. of.”
More importantly it will show whether Tesla (Tesla) It’s on track to deliver on CEO Elon Musk’s promise that the company will be profitable in the third and fourth quarters. As a public company, the company has only had two narrowly profitable quarters in its history, and it suffered its largest ever loss in the second quarter as it rushed to ramp up production.
Those losses, along with Tesla’s more than $1 billion in debt due next spring, are why some experts have raised the possibility of a cash crunch at Tesla, which could force the company to sell more shares to raise cash. That could become more difficult as the stock loses value and Musk faces a federal lawsuit for misleading investors.
Musk insists the company doesn’t need to raise cash because it will generate more revenue as production ramps up. But he also acknowledged that the company was having trouble delivering all the cars it was producing.
“Sorry, we’ve gone from production hell to delivery logistics hell,” Musk wrote on Twitter two weeks ago, though he promised, “We are making rapid progress. It should be resolved soon.”
Needless to say, customers waiting for Tesla won’t be paying for their long-awaited cars until the vehicles are actually delivered. Therefore, logistics issues can become a red flag for a company’s revenue.
“The delivery chaos and chaos they’re experiencing right now is troubling,” said Rebecca Lindland, an analyst at Cox Automotive.
She said that while some Tesla fans may want to focus on reported production numbers, it’s important to focus on production and deliveries.
The most important report in Tesla’s history is clouded by controversy.
In August, Musk announced via Twitter that he planned to take the company private at $420 per share and that he had “secured funding.” While some investors have expressed interest in financing such a deal, there are no guarantees, according to the SEC. He abandoned plans to go private by the end of the month. But by then he had been sued by shareholders, accusing the tweet of being a deceptive act to manipulate stock prices. On Thursday, the U.S. Securities and Exchange Commission filed a lawsuit against Musk, seeking to remove him from his position as an executive at Tesla or any other public company.
Add to that the stories of Musk losing sleep and smoking during his podcast, as well as the story of his other company, SpaceX, pitching a trip to the moon for a billionaire tourist, and it’s easy to forget that a successful A good metric is actually how many cars you can build and sell.
CNN Business (New York) First published September 28, 2018: 3:47pm ET