Tesla beats on top and bottom, but lowers guidance

Investors pump the brakes on Tesla
Musk: Model X production a 'challenge'
Disappointing guidance stalls Tesla
Tesla tumbles on outlook

Tesla reported second-quarter results on Wednesday that beat Wall Street expectations, but it lowered its deliveries guidance for the year.

The company said it saw a quarterly loss of 48 cents per share on $1.20 billion in adjusted revenue. Analysts expected Tesla to report a loss of 60 cents per share on $1.18 billion in revenue, according to a consensus estimate from Thomson Reuters.

The company lowered its full-year delivery guidance—a key figure—to "between 50,000 and 55,000." Tesla said in May that it expected about 55,000 for its Model S and Model X combined.

"While our equipment installation and final testing of Model X is going well, there are many dependencies that could influence our Q4 production and deliveries," the company said in its Wednesday shareholder letter, adding that possible issues are in part because "Model S and Model X are produced on the same general assembly line, (and) Model X production challenges could slow Model S production."

"Simply put, in a choice between a great product or hitting quarterly numbers, we will take the former," the letter explained.

Shares in the company fell more than 7 percent in after-hours trading after the earnings release, but then pared some of those losses. (Click here to track Tesla shares after the report.)

Tesla investors are focused on the second half of the year for the electric car company, particularly looking at whether the Model X is on schedule for delivery.

In the letter signed by Chairman and CEO Elon Musk and CFO Deepak Ahuja, Tesla reaffirmed that deliveries for the new vehicle are on track to begin late in its third (and now current) quarter.

Wall Street was expecting about 433 deliveries for the Model X this quarter, according to StreetAcount. Musk said the X may be the hardest car in the world to build.

"We do think that it's going to be quite a challenging production ramp on the X...and we only want to deliver great cars, so we don't want to drive to a number that's greater than our ability to deliver high-quality vehicles," Musk said on the company's earnings call, adding that he wants to emphasize a "better picture of the business" that includes production in the first quarter of 2016.

Guidance for the current quarter came in light: Tesla said it expects to deliver approximately 11,500 cars despite analyst expectations of about 13,113, according to StreetAcount.

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"It is a hiccup. It's not the end of the world. It doesn't change the reason why investors own this for the long term," Ben Kallo, senior research analyst at Robert W. Baird, said of the guidance. (He has an "outperform" rating on the stock and a $335 price target.)

Tesla shares have performed well in 2015, gaining more than 20 percent to exceed $269. Still, the average analyst price target on the stock stands at nearly $280, according to FactSet.

"Obviously, we are going to be buying it into the weakness tomorrow," Kallo said. "We have a much longer term view."

Looking behind this year, Musk and Ahuja struck an optimistic tone, writing that that are "highly confident of a steady state production and demand of 1,600 to 1,800 vehicles per week combined for Model S and Model X."

LeBeau Tweet.

But income from car sales may be affected by the strong dollar, the company executives said in both the letter and the earnings call. This includes an expectation that the Model S average selling price will decline by more than 100 basis points in the current quarter in part because of the U.S. currency.

"The dollar has had a huge impact, just from Q1 to Q2 it took 100 basis-points out for us, roughly," Ahuja said on the call.

A Tesla Model S is displayed at a Tesla showroom in Palo Alto, California.
Getty Images

The executives also addressed the company's energy storage business, with Musk saying "the demand has been really crazy," adding the company has seen over $1 billion worth of reservations without any real marketing.

He predicted that the growth rate for the stationary storage business "is probably just going to keep going at quite a nutty level," likely amounting to "at least a few billion dollars" in 2017.

Tesla's Nevada "Gigafactory" battery plant is on track to begin production in the first quarter of 2016, CTO J.B. Straubel said on the call. Musk said the company is seeing greater efficiency in the plant than it originally expected.

The CEO added that, within five years, it will begin to make sense for Tesla to build plants in Europe and Asia if it wants to exceed 500,000 annual deliveries.

As for the future of the company's self-driving cars, one analyst asked if Tesla would consider teaming up with a ride-sharing company like Uber, or if it would rather go it alone by selling on-demand mobility services on its own platform.

"That's an insightful question," Musk said after a pause. "I don't think I should answer it."

—Reuters contributed to this report.