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Tesla earnings show smaller-than-expected loss

SpaceX to launch Tesla into space

Yesterday, Elon Musk had millions of Americans marveling as his SpaceX Falcon Heavy mega-rocket sent a Tesla roadster into an interplanetary orbit. Today posed another test, and this time all eyes are on Musk's Tesla (TSLA) as it reported much-anticipated fourth-quarter earnings after the stock market closed on Wednesday.

Tesla posted a record quarterly net loss of $675 million in the fourth quarter, up from a net loss of $121 million in the same period a year ago. The Palo Alto, California-based automaker is struggling to meet production targets for its first mass-market car, the Model 3 sedan. It's also spending heavily on future vehicles, including a semi that's supposed to go into production next year.

The company lost $1.96 billion for the full year of 2017, nearly three times its loss of $675 million in 2016. The company has never made a full-year profit since it went public in 2010.

Tesla's adjusted fourth-quarter loss, of $3.04 per share, was ahead of Wall Street's estimated loss of $3.15 per share, according to analysts polled by FactSet. The adjusted loss eliminates one-time expenses, including stock-based compensation. Revenue for the quarter was $3.3 billion, which was in line with analysts' forecasts.

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Tesla's total revenue for 2017 was $11.8 billion, which was also in line with analysts' forecasts.

Investors' initial reaction immediately after the earnings report was positive, pushing the stock up by more than 2 percent to $354. It soon trimmed that back a bit to a 1 percent gain.

"At some point in 2018, we expect to begin generating positive quarterly operating income on a sustained basis," said CEO Musk in the earnings release. "With the planned ramp of both Model 3 and our energy storage products, our rate of revenue growth this year is poised to significantly exceed last year's growth rate."   

Tesla is banking on the more affordable Model 3 sedan as it tries to move from a high-end niche player to a mass-volume manufacturer. The attempted transition has not been an entirely smooth one, with Tesla falling short of production targets as it dealt with unexplained issues at an assembly plant in California and its Gigafactory in Nevada. 

SpaceX launches Falcon Heavy rocket

The company last month said it anticipated a slower ramp-up in production through the first quarter, with its goal of producing 5,000 vehicles a week expected by late June, putting it three months behind prior guidance.

"We continue to target weekly Model 3 production rates of 2,500 by the end of Q1 and 5,000 by the end of Q2," said Musk in the statement. "It is important to note that while these are the levels we are focused on hitting and we have plans in place to achieve them, our prior experience on the Model 3 ramp has demonstrated the difficulty of accurately forecasting specific production rates at specific points in time."   

Among the topics likely to be discussed on the conference call later today with analysts and investors are those shifting production targets, last month's announcement of a proposed all-or-nothing pay package for Musk and how much cash Tesla is burning through.