Shortly after market opening, Tesla shares (NASDAQ:TSLA) dropped 9.68 percent to 34.81 in the wake of yesterday’s earnings. The company disappointed investors as it reported a quarterly loss of $89.9 million, or 79 cents a share, compared with a loss of $81.5 million last year, or 78 cents a share.
Yet, revenue increased to $306.3 million compared to $39.4 million last year. Gross margin increased from -17 percent to 7.8 percent but operating expenses rose at the same time. The company couldn’t cover those expenses with its sales increase.
Tesla is still spending an important part of its revenue on research and development. That’s why the company is still not turning a profit. It’s a public company that acts like a private startup.
Investors are focused on short-term financial outlook. So shares are trading down today. Yet, as Tesla only expects to sell 20,000 Model S’s in 2013, the company is right to focus on research investment now. It can iterate quickly and this is a key advantage when competing with established car manufacturers.
Recently, Elon Musk got in an argument with The New York Times due to a review. Today’s downturn seems to be unrelated.
For next quarter, Tesla expects to report a slight profit. It would be an important milestone for the company.