Tesla shares fall 11% day after posting Q1 loss

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LOS ANGELES (Bloomberg) -- Tesla Motors Inc. tumbled the most in more than five months after the electric-car maker reported a first-quarter loss and vehicle deliveries that trailed the highest analyst estimate amid constraints of battery supplies.

Tesla fell 11 percent to $178.59 today after the company said Wednesday that supplies of the lithium ion batteries used to power its Model S sedans will be tight until the second half. Through Wednesday, shares had grown 34 percent this year.

“Whereas investors had grown accustomed to Tesla providing delivery guidance ahead of expectations, the trend was broken” for the second quarter, Brian Johnson, a Barclays Plc analyst, said today in a report. The forecast will likely put the stock “in the penalty box in the near term,” said Johnson, who rates Tesla the equivalent of a hold.

Quarterly Model S deliveries rose to 6,457 cars from about 4,900 a year earlier, Tesla said Wednesday. While that exceeded the average of seven analyst estimates, it was less than the highest forecast for as much as 6,600. Growth was held back by tight supply of lithium cells for Tesla batteries, and that won’t ease until the third quarter, CEO Elon Musk said.

Tesla plans to deliver about 7,500 cars to customers in the second quarter. That’s below Johnson’s estimate of about 7,800, he said in the report.

Gigafactory progress

The automaker is scouting sites for a plant big enough to cut battery costs by 30 percent. Panasonic Corp., its main supplier of battery cells, has signed a letter of intent to join the “gigafactory” project, the company said Wednesday.

“We’re actually quite comfortable that we’re heading toward a final agreement sometime later this year,” JB Straubel, Tesla’s chief technology officer, said during Wednesday’s call to discuss earnings.

Groundbreaking could begin as early as next month, Musk said. Tesla has named Arizona, Nevada, New Mexico and Texas as possible factory sites and said it will break ground in at least two states. California is being looked at as another option, though its selection is “improbable,” he said. While Panasonic will be the only cell supplier at the factory, Tesla may buy cells from other suppliers, Musk said, without elaborating.

Chieko Gyobu, a Panasonic spokeswoman, confirmed the letter of intent by e-mail.

“We are talking to Tesla about joining the gigafactory,” Gyobu said. “We’ll discuss details going forward.”

Quarterly results

On a GAAP basis, Tesla said it lost 40 cents a share and said its net loss was $49.8 million, from a profit of $11.2 million a year earlier.

On a non-GAAP basis, Tesla reported first-quarter earnings of 12 cents a share, excluding some items. That matched the adjusted profit that the company reported a year earlier and exceeded the 7 cents-a-share profit average of estimates compiled by Bloomberg.

Tesla recorded a $2 million charge during the period to retrofit Model S battery packs with titanium shields for extra safety in the event of a crash. The automaker forecast a “slightly” negative cash flow for the year and said that operating expenses related to research and development will increase by about 30 percent this quarter. Such costs were $82 million on a GAAP basis and $68 million on a non-GAAP basis in the first quarter.

“Large sequential increases in operating expense” could put pressure on the shares today, Ryan Brinkman, an analyst with JPMorgan Chase & Co. wrote in a research note. He has the equivalent of a hold rating on the stock.

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