Financial analysts are expecting Tesla to report marginal losses during its meet up with investors this week. The company is forecasted to experience a downward trend for the first quarter following the announcements made by its Chief Executive Officer, Elon Musk. The CEO recently mentioned that the company was going through a "very difficult" road and that there might be some setbacks before they experience any profits this year.
Musk made the statement during a press event held last month. The CEO also announced a number of layoffs within his different companies, affecting thousands of employees. He mentioned that there would only be a marginal profit, if any, for the first quarter of 2019 and that with "some luck" this might turn around by the end of the year.
The founder of Tesla Motors and Space X also predicted that the profits may be coming in the fourth quarter, but it may be down from the third quarter profits of US$311.5 million. Analysts at Wall Street have pretty much agreed with Musk's predictions, with the company likely experiencing a loss as it stands around US$2.5 million. The company was initially expected to post a profit of US$62.80 million.
Gene Munster, an analyst from Loup Ventures, mentioned that the company's losses are expected given that the first few months of the year will see it transporting thousands of vehicles to Asia and some parts of Europe. During this time, Tesla will not be making any money from sales and will likely spend millions in logistic solutions. Munster's statements coincide with the company's previous announcements that it was going to start delivering Model 3 units to Europe and China by February.
There are still some doubts about Tesla's profitability and its ability to make good on the promise made by its CEO. Musk's goal to deliver an affordable US$35,000 electric vehicle to the masses has been met with a number of hurdles over the years. This has also shaken investor's confidence in the company given that it has not yet fully delivered on its promise. Musk initially unveiled the Model 3 three years ago, but the company has faced logistics issues and production roadblocks, leading to the delay of the vehicle's distribution and delivery.
With most of their problems behind them, the company has started to produce Model 3s at a steady rate, with 5,000 vehicles rolling out the production line each week. However, Tesla may be facing new hurdles this year, one of which will involve the recent reduction of electric car tax credits. Tesla recently had to lower the price of its Model 3, which may further cut into the company's marginal profits.
