Tesla shares fall following disappointing Model S sales

Q3 revenue and net income are way, way up, but Model S sales missed the mark

Tesla shareholders are vexed. VEXED I say! While the electric vehicle maker’s revenues were up over 1100% year-over-year and Model S sales slightly exceeded guidance for the quarter, Wall Street was expecting more and remains disappointed. Shares plopped 12.5% in after-hours trading to $154.70 from $176.81 at the close Tuesday.

What happened? 1100% revenue growth—that’s pretty good, right? The company posted quarterly revenues of $603 million, up 6% from Q2, and up 1100% from the same quarter last year, when it reported revenues of $50.1 million. Analysts were expecting $535 million in revenue. So…that’s good, right?

Wrong. While year-over-year revenue growth was strong, analysts were expecting Tesla to sell a lot more Model S vehicles. Tesla had posted guidance for the quarter of 5,000 Model S vehicles sold, and it came in ahead of that at more than 5,500. But Wall Street was expecting at least 6,200 sold.

But everything else was great! Just not Model S sales.

Tesla reported a net income of $16 million, or $0.12 a share, which is slightly more than the $0.11 a share that analysts were expecting.

There are now more than 19,000 Model S vehicles on the street in over 20 countries (I saw one just the other day!). Tesla is now producing 550 cars per week and delivered 5,500 over the course of the third quarter. Of those, 1,000 went to European customers.

To keep pace with mounting production, Tesla expanded its supplier agreement with Panasonic (made in 2011). Under the new agreement, Panasonic will supply Tesla with 1.8 billion automotive-grade lithium-ion battery cells over the next four years, which is more than three times the originally agreed upon number.

“This number should be seen as more of a floor than a ceiling,” CEO Elon Musk and CFO Deepak Ahuja wrote in a letter to shareholders.

The company also began receiving orders from China during the third quarter and plans to start shipping in the first quarter of 2014.

Tesla set its Q4 outlook at some 6,000 Model S deliveries, which will bring total worldwide deliveries to 21,500 for the year.

While shares have dipped in after-hours trading, they’re up a full 511.41% over the course of the last year, which Elon Musk recently admitted is slightly ridiculous.

“The stock price that we have is more than we have any right to deserve,” said Musk in a Bloomberg TV interview last month. "We're going to do our best to fulfill the expectations of investors and I think in the long-term that stock price is going to seem fair.”