Tesla Makes Progress but Faces Long Journey Ahead
The firm's long-term story--not any single quarter's results--will ultimately determine the value of the company.
Vehicle deliveries increased year over year by 19.7% to 29,997, with the Model 3 sedan comprising 8,182 of the total. Management continues to expect a Model 3 weekly production rate of 5,000 in about two months’ time. Tesla Energy’s revenue nearly doubled year over year to $410 million with storage revenue growth of 161% more than offsetting a 50% decline in energy generation megawatts down to 76 MW. Also encouraging is cash sales' continued increase as a percent of total residential solar deployments (66% in first quarter versus 54% in fourth quarter and 31% in first-quarter 2017) which helps cash flow compared with the old leasing format under SolarCity.
We expect a dramatic improvement in profit and cash flow soon, in either second-quarter--or more likely--third-quarter results, due to a large jump in Model 3 deliveries later this year. Management also has high expectations as they expect Tesla to be profitable on a GAAP basis and have positive cash flow for third and fourth quarter. We calculate adjusted free cash burn for the quarter of $942 million compared with cash burns in fourth-quarter 2017 and first-quarter 2018 of $181.9 million and $436.1 million, respectively.
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