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Why Tesla Stock Fell Thursday

By Daniel Sparks - Apr 25, 2019 at 6:24PM

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A rosy outlook from Tesla management didn't impress the Street.

What happened

Shares of electric-car company Tesla (TSLA 5.14%) took a hit on Thursday, falling as much as 4.9%. By market close, the stock was down 4.3%.

The stock's decline follows the automaker's first-quarter financial results and bearish commentary about the company from several notable analysts.

A white Model X with open falcon wing doors.

Model X. Image source: Tesla.

So what

Tesla swung from a profit in its fourth quarter of 2018 to a non-GAAP loss of $2.90 per share in its first quarter of 2019. However, the non-GAAP loss narrowed compared to a loss of $3.35 per share in the year-ago quarter. The hit to earnings came as Tesla's first-quarter deliveries were lower than expected due to weaker demand for its Model S and X vehicles.

Some Wall Street analysts were disappointed with the quarter.

Pointing to Tesla's guidance for demand to increase throughout the year as the company expands globally, Wedbush analyst Daniel Ives said (via CNBC), "In our 20 years of covering tech stocks on the Street we view this quarter as one of [the] top debacles we have ever seen." The management team is acting as if demand and profitability "will magically return," the analyst said. Ives lowered his rating on the stock from outperform to neutral.

Morgan Stanley analyst Adam Jonas wrote in a note to clients that he believes the company will raise $2.5 billion of capital later this year. "We think Tesla is waiting to demonstrate a recovery in demand and cash flow before looking to stabilize its balance sheet," Jonas said.

Now what

Despite the Street's concerns about demand for Tesla vehicles, the electric-car maker reiterated its guidance for full-year vehicle deliveries to increase 45% to 65% year over year. Management also said it expects to be free cash flow positive in the remaining three quarters of the year.

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