Stock Price Slumps Ahead Of Crucial Decision For Company’s Future.
Tesla Motors investors are getting nervous waiting for details of the upstart electric car maker’s new battery factory, and the share price has gone into reverse.
Tesla announced its latest financial numbers early in May, posting a net loss of $49.8 million compared with a net profit of $11.3 million in the same period of 2013. Sales rose to $620 million from $555 million.
But it wasn’t the financial losses which spooked investors, it was uncertainty ahead of an agreement about the new battery factory, according to Morgan Stanley.
At this stage of the company’s development, high research and development, electric infrastructure, and marketing costs are taking a big bite out of profits. And much of Tesla’s profits have been coming from complicated government subsidy schemes designed to raise the number of electric cars from all manufacturers. Analysts said the latest results were in line with expectations.
In April Tesla’s already stratospheric share price zoomed again close to $260. After this month’s financial results it slipped back to nearly $180, although a year ago it was around $35 a share. In April, Tesla announced plans to invest $2 billion in a U.S. car battery plant costing between $5 billion and $6 billion that could supply lithium ion battery packs for 500,000 vehicles a year by 2020. Tesla is close to signing up Panasonic as a partner in this so-called “giga-factory”, and has actually broken ground at two sites which might eventually be used for the plant.
But the importance of the deal is making investors go wobbly.