Tesla CEO Musk says market value could rival Apple by 2025

Wed Feb 11, 2015 9:34pm EST
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By Paul Lienert

DETROIT (Reuters) - Tesla Motors Inc missed fourth-quarter sales targets and analysts' profit expectations, but Chief Executive Officer Elon Musk on Wednesday said by 2025 Tesla's growth trajectory could take its market value to $700 billion, matching that of Apple Inc.

It was a glimmer of optimism capping a difficult quarter that saw the electric-car company struggle with production and delivery issues on several fronts, notably in China.

Investors sent shares down nearly 4 percent in after-hours trade, after Tesla said heavy capital and operating expenses would escalate in 2015.

Expansion of the company's global sales network and development of the new Model X crossover increased operating expenses in the fourth quarter to $336.5 million, from $169.9 million a year ago.

Operating expenses for the year were $1.07 billion and are expected to grow another 45 percent to 50 percent in 2015.

Free cash flow in the quarter was a negative $455.1 million, as cash dwindled to $1.91 billion from $2.37 billion at the end of the third quarter. The company's cash burn next year should be less than $1.0 billion, according to Chief Financial Officer Deepak Ahuja.

Musk told analysts late Wednesday that Tesla should return to positive cash flow in late 2015, but said he did not see the need to raise additional funds "right now."

He countered analysts' question about Tesla's cash position by painting an upbeat picture of the company's long-term prospects.   Continued...

The logo is seen on a new all-wheel-drive version of the Tesla Model S car in Hawthorne, California October 9, 2014.  REUTERS/Lucy Nicholson