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Tesla stock falls on earnings report

DETROIT (AP) — Shares of electric car maker Tesla Motors fell more than 8 percent Thursday, a day after the company reported a $49.8 million first-quarter loss and said that reinvestment in the company would weigh on earnings later this year.

The company also said its free cash flow — cash from operations minus cash invested in the business — would be negative for the rest of the year because of $650 million to $850 million in capital spending for increased production capacity.

Shares of the Palo Alto, California, company dropped $16.50, or 8.2 percent, to $184.85 in midday trading.

The company now sells only one car, the Model S, which starts at $70,000. But it's working on two other vehicles, an electric crossover SUV called the Model X and a lower-cost model that will sell to the masses.

Stifel analyst James Albertine, in a note to investors, said the earnings message brings Tesla's momentum-driven stock back to reality. He expects shares to settle into a range of $175 to $195. They've been as high as $265 in the past year after rising in value seven times what they were worth at the end of 2012.

"While TSLA has made significant advances in pioneering electrification for high-end vehicle consumers, the reality is its production, retail and infrastructure obstacles ahead resemble an automotive company rather than a technology company," Albertine wrote.

He expects Tesla to gain market share and continue to produce exciting new models, but is keeping a "Hold" rating on the stock.

For the January-March quarter, research and development costs jumped 49 percent to $81.5 million as Tesla prepares to launch the Model X crossover next year. Tesla released its earnings after the market closed on Wednesday.

For the quarter that ended on March 31, Tesla posted a loss of 40 cents per share compared with a profit of 10 cents in the January-March period last year — the decade-old company's first profitable quarter. Revenue rose 10 percent to $620.5 million in the latest period.

Excluding stock-based compensation and accounting for leasing, Tesla posted a profit of 12 cents per share on revenue of $713 million. Tesla's lease program allows it to get all of the money for the cars it leases up front, but general accounting rules require the money from a lease to be spread out over the course of the lease term.

Analysts polled by FactSet had forecast a profit of 8 cents per share on revenue of $683.5 million.

Tesla expects to deliver 7,500 of its Model S sedans in the second quarter, and reiterated its plan to sell more than 35,000 cars this year. The company also expects to increase production in the second quarter, from 8,500 to 9,000 cars.

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