Tesla’s stock (TSLA) was down by as much as 10% in pre-market trading as financial analysts weigh in on the automaker’s disappointing delivery and production numbers for the first quarter.
It represents a 31% drop in sales and it’s lower than many expectations.
As we noted, Model S and Model X sales were especially down last quarter and RBC analysts referred to them as “very disappointing” and said it would likely translate to a more than $1 billion reduction in estimated revenue.
Current delivery results aside, J.P. Morgan analyst Ryan Brinkman noted some inconsistencies in Tesla’s guidance for future deliveries:
“Even if it could be argued that official full year guidance somehow increased from 360,000 ti 400,000 deliveries at the time of the shareholder letter to 350,000 to 500,000 of the Model 3 alone just hours later, to 420,000 to 600,000 total production on February 28 — and now back down to 360,000 to 400,000 deliveries — the choppiness and inconsistency of this communication would still in our view erode investor confidence.”
Brinkman even says that it might undermine Elon Musk’s defense for his current legal dispute over his SEC settlement.
The analyst was also surprised by the delivery numbers in Q1:
“Tesla’s 1Q19 vehicle production & deliveries report was substantially worse than expected…Deliveries tracked just 63,000 units vs. JPM 70,500 and consensus as recently as March 27 of 74,930, suggesting materially less 1Q revenue, margin, and free cash flow…”
J.P. Morgan reduced its price target on Tesla to $200.
Goldman Sachs analyst David Tamberrino also weighed in with similar thoughts:
“Altogether, we think the delivery results will put pressure on TSLA’s shares, and corroborates our belief that volume expectations for the company’s products in 2019 are too high with consumer demand likely lower as subsidies phase out in the US. Further, this likely puts downward pressure on our EBITDA and FCF estimates (as well as consensus) given the lower volume levels and worse utilization than anticipated.”
He reiterated the firm’s sell rating on Tesla’s stock.
Other analysts are not as disappointed by Tesla’s quarter.
Wedbush Securities sees it as “an air pocket quarter”. They wrote in a new note to clients:
“The Street was expecting an apocalyptic quarter and Model 3 deliveries were slightly better than feared by many with 50k Model 3 vehicles the line in the sand although the overall number was clearly rocky and represents an air pocket quarter in our opinion,”
But Wedbush is the outlier here and most analysts are negative on Tesla’s quarter and it is putting pressure on the stock.
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