News Column

Tesla Shares Jump on Profit Gains, Forecast

February 20, 2014

The Associated Press

Tesla Motors Inc.'s shares jumped Thursday on the electric-car maker's strong fourth-quarter performance and its forecast that production will rev up this year.

The Palo Alto, Calif., company said late Wednesday that it expects to deliver more than 35,000 of its Model S sedans in 2014, up 55 percent from last year.

Tesla investors focus heavily on the car maker's forecasts because demand has outstripped its supply in the past.

The company said battery cell supply will continue to constrain its production but expects that should improve in the second half of the year. It also is planning improvements at its California factory to help meet rising demand and ramp up for the Model X, a new electric SUV.

Tesla reported that it earned 33 cents per share for its fourth quarter on an adjusted basis, far exceeding analyst expectations of 23 cents per share, according to FactSet. It got a boost from strong demand and improved profit margins. Revenue more than doubled to $615.2 million as it produced a record number of cars, but fell short of market forecasts of $683.9 million.

Shares of the company have been on a meteoric rise over the past two years, to levels that, at times, even its own CEO Elon Musk said it might not deserve.

Tesla's stock price fell last year following fires involving its cars, but investor enthusiasm has returned. Musk said demand resumed as consumers became aware that the cars were safe. The U.S. National Highway Traffic Safety Administration is investigating the fires.

Its stock also got a boost on reports that the company was in talks with Apple Inc. Musk confirmed that the two companies "had conversations" on an interview with Bloomberg television but said an acquisition is "very unlikely." A representative for Tesla could not be reached immediately to comment.

Shares jumped $13.69, a 7 percent gain, to $207.33 by midday Thursday.

Tesla shares have increased in price more than five-fold in the past two years, jumping from about $35 at this time in 2012 to $193.64 Wednesday.

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Source: Associated Press

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