Tesla shares fall after company posts fourth-quarter profit that misses expectations

Tesla reported its second-consecutive quarterly profit Wednesday, but it was short of analysts’ expectations and sent shares south after the markets closed.

Here’s how the company did compared with what Wall Street expected:

  • Adjusted EPS: $1.93 versus $2.20, according to average estimates compiled by Refinitiv
  • Revenue: $7.23 billion versus $7.08 billion, according to average estimates compiled by Refinitiv

Investors have been paying close attention to any indication of how profitable Tesla’s cars are, particularly the Model 3 sedan. The $7,500 federal tax credit on every Tesla vehicle sold was cut to $3,750 at the beginning of the year, after Tesla sold its allotted 200,000 units that qualified for the full credit.

As that credit winds down, investors are keenly interested in whether demand for the Model 3 can stand on its own, particularly since the company has yet to release a version of the sedan at the $35,000 sticker price Tesla originally promised.

Eyes are also on whether Tesla needs to raise any more capital in the short term, especially given the fact that it needs to pay off $920 million in debt due on March 1. Bondholders can convert the debt into equity if the shares trade at or above the strike price of $359.87. But below that price, Tesla would likely have to pay off the notes with cash.

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