It took Tesla Inc. longer than usual to release its first-quarter results Wednesday evening. One can see why.

As the sales numbers foreshadowed (again, with an unusual delay), revenue dropped more than a third versus the prior quarter, although it was still up a third over a year earlier. Automotive gross profit margin came in at just under 20 percent after stripping out zero-emission vehicle credits, down from around 24-25 percent in the prior two quarters and the lowest in a year. The loss per share was double the consensus estimate, despite frantic cuts to those estimates in recent weeks. Free cash flow, which reached around $909 million into the black in the last quarter of 2018, swung to a burn of roughly the same magnitude.

A year ago, concerns around Tesla centered on producing vehicles. Today, demand is front and center. Tesla’s message on Wednesday essentially boiled down to saying the first quarter’s drop-off in sales owed a lot to production sequencing and logistical delays as the company began selling Model 3s overseas. It stuck to its forecast (one of them, anyway) of delivering 360,000 to 400,000 vehicles in 2019. Tesla says it will deliver 90,000 to 100,000 in the current quarter. That would be an increase of perhaps 59 percent versus the prior quarter. Even so, Tesla expects a loss in the period. The implication is that deliveries will surge to somewhere between 103,000 and 118,000 in each of the last two quarters of the year, bringing Tesla back into the black.

This is critical, and not just because the stock, despite dropping more than a fifth this year, trades at 130 times forecast non-GAAP earnings for 2019. The big reason is cash, which fell by $1.46 billion to end March at $2.2 billion. Part of that reflects Tesla having to pay off a $920 million convertible bond. But it’s also a sharp demonstration of what a slowdown does to Tesla’s cash flow and working capital.

It’s worth noting that capital expenditure came in at $280 million, just 60 percent of depreciation and the lowest in almost three years. Tesla also reduced guidance for capex this year, down from “about $2.5 billion” to a range of $2-$2.5 billion. Yet the first quarter’s spending was substantially below the run-rate for even the bottom end of that range. This for a growth company.

Without such restraint, however, Tesla’s liquidity ratios would look even worse than they do already.

The drop in the cash balance also makes Tesla more reliant on customer deposits. These now account for more than a third of the balance, despite dropping slightly from the end of December. This raised a question on the analyst call, given that Tesla began taking orders for the Model Y in mid-March. But CEO Elon Musk demurred on the subject of how many advance payments for the vehicle had been received, saying Tesla wasn’t “playing up” the Model Y because it isn’t in production yet. Those with memories stretching all the way back to 2016 will recall that wasn’t an issue when he was tweeting out regular updates on Model 3 orders, more than a year before that car began to roll off the line.

And yet Tesla remains resistant to the idea of raising more equity, despite questions about it on the call. For now, the message is that demand is strong, even though Tesla has been cutting prices just like any other car-maker does when inventory is up and they are trying to move metal. As the stock’s multiple suggests, faith in Tesla’s guidance remains strong for many investors. But the cash balance speaks to a narrowing margin of error. If the stock market hasn’t necessarily caught on to that, the bond market seems a little more ahead of the game.

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Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal’s Heard on the Street column and wrote for the Financial Times’ Lex column. He was also an investment banker.

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