Tesla meets Model 3 production goals and sales targets, but shares still fall

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Tesla Inc. shares fell nearly 2% Tuesday after the Silicon Valley car maker beat delivery expectations and met Model 3 production goals for the third quarter, as investors continued to fret about the company following its run-in with U.S. securities regulators.

Tesla TSLA, -1.28%  shares fell 1.7%, giving back some of Monday’s rally, after the company reached a surprise deal with the Securities and Exchange Commission on fraud charges related to a going-private tweet by Chief Executive Elon Musk. Tesla kept mum on profit and cash flow numbers.

The electric car maker said it produced 53,239 Model 3 vehicles, in line with its guidance and almost double the volume of the second quarter. That included more than 5,300 Model 3 sedans in the last week of the quarter, achieving a production rate of more than 10,000 vehicles per week, it said in a statement.

During the quarter, it transitioned Model 3 production “from entirely rear wheel drive at the beginning of the quarter to almost entirely dual motor during the last few weeks of the quarter,” it said. “This added significant complexity, but we successfully executed this transition and ultimately produced more dual motor than rear wheel drive cars in Q3.”

Tesla produced 26,903 Model S luxury sedans and Model X luxury SUVs, which was slightly higher than the second quarter and in line with the company’s full-year guidance.

The company said it would have profit and cash flow numbers when it announces its third-quarter results. A date has not been set, but it will likely be early next month.

Tesla has vowed to be profitable and cash-flow positive in the third and fourth quarters. Tesla has reported net annual losses every year since it went public in June 2010.

Related: Elon Musk settles with SEC, will remain Tesla CEO but resign as chairman

Deliveries totaled 83,500 vehicles, of which 55,840 were Model 3s, 14,470 were Model Ss and 13,190 were Model Xs.

“To put this in perspective, in just Q3, we delivered more than 80% of the vehicles that we delivered in all of 2017, and we delivered about twice as many Model 3s as we did in all previous quarters combined,” Tesla said.

Analysts polled by FactSet had expected Tesla to deliver about 80,000 vehicles in the quarter, including 55,600 Model 3 sedans. Model S and Model X deliveries were expected to reach 12,900 and 12,500, according to FactSet.

Model 3 deliveries continued to be limited to higher-priced, higher-trim sedans, cash or loan transactions, and to North American customers only, Tesla said.

There are “significant opportunities to grow the addressable market for Model 3 by introducing leasing, standard battery and other lower-priced variants of the car, and by starting international deliveries,” it said.

There were 8,048 Model 3 vehicles in transit to customers at the end of the third quarter, which will be delivered early in the fourth quarter.

It is sticking with its target to deliver 100,000 Model S and X deliveries in 2018.

Tesla, unlike most car makers, does not report monthly sales, opting to report quarterly numbers on production and deliveries, its proxy for sales.

Bloomberg reported Sunday that Musk had emailed Tesla employees over the weekend to say that Tesla was on the verge of making a profit.

The company’s stock has been on a roller-coaster in recent sessions, buffeted by news in connection with Chief Executive Elon Musk’s going-private August tweets and the settlement with the SEC just a couple of days after the regulators had filed a complaint.

Tesla shares jumped 17% on Monday, the first trading day after that settlement.

Wall Street should have more room to focus on the fundamentals for Tesla, analysts at Baird and Guggenheim, among others, pointed out. Ramping up Model 3 deliveries has been one of the expected highlights for Tesla.

The stock has lost 1.8% this year, which contrasts with advances of 9% and 8% for the S&P 500 index SPX, +0.00%  and the Dow Jones Industrial Average. DJIA, +0.30%