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Tesla Up After Earnings Call and Apology from Musk

Wednesday’s call with Elon Musk at Tesla (NASDAQ:TSLA) certainly proved to be positive and bring some confidence back to their production nightmares.  Musk went over some of the highlights of their findings in debugging their manufacturing processes as well as projections for the future.  With a mixture of positive production changes and projections as well as a new tone from Musk, the stock surged to heights of 11% after the earnings call.

After running into production issues earlier in the year with the Model 3, CEO Elon Musk assigned himself to the job.  He even reportedly slept in the factory itself for a time to work diligently on the project.  It must have payed off, as the Model 3’s production has finally began to ramp up and has contributed $4 billion in revenue in the 2nd quarter.

On the call it was mentioned that after working on the issues with the Model 3’s production, they believe the “existing lines to be able to produce far more cars.”  Additionally, Musk mentioned that by 2020 production would be up to 1 million cars or “it is going to be pretty close.”

While Tesla begins to remedy their previous production issues, they’re also burning through less cash.  Prior to the call, analysts predicted Tesla’s free cash flow would be about negative $900 million.  By surprise, Musk reported only negative $739 million in free cash flow, adding some more positive news to the mix.

What may have been the biggest change between the last call and the one on Wednesday would be Musk’s tone and two personal apologies.  Musk’s tone seemed more relaxed than last, and even blames his last calls performance on a lack of sleep.  In addition, Musk personally apologized to Bernstein’s Toni Sacconaghi and RBC’s Joseph Spak, which redeemed him a bit for his previous out lash.

Tesla Earnings Call

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