Tesla shares plunged nearly 9% Thursday morning as Wall Street analysts sounded off on the company’s disappointing delivery figures released the evening prior, leading at least one prominent analyst to slash his price target on the name.
The disappointing showing renewed concerns over softening demand for Tesla’s electric vehicles. That has been a major pain point for shareholders in recent months – even amid the long-awaited $35,000 Model 3 unveiling and and newly released Model Y.
Analysts for the most part sounded exasperated in their notes sent out to clients following the results. After all, they’re trying to square not only the delivery figures that have implications for Tesla’s first-quater results, but also a chief executive that’s mired in a legal battle with the Securities and Exchange Commission – over tweeting about production.
“The now clear incongruence of CEO outlook statements with official company guidance may hurt the perception of management commentary, eroding investor confidence and potentially placing additional pressures on the shares,” wrote Ryan Brinkman, an analyst at JP Morgan. He cut his price target from $215 to $200 a share, implying a drop of about 24% from where shares were trading Thursday morning.
Tesla said in a filing out Wednesday that a large number of deliveries would shift to the second quarter due to a “massive increase” in demand from China and Europe.
Some analysts were concerned about this point alone. “Tesla indicated 50% of deliveries were made in the last 10 days of the quarter, continuing to highlight logistics challenge,” Jefferies analyst Philippe Houchois said in a note.
On Thursday, a judge in New York City is expected to hear oral arguments on whether CEO Elon Musk should be held in contempt of court for tweeting about production numbers earlier this year.
Here’s a snapshot of what other Tesla analysts are saying about the Tesla’s first-quarter deliveries:
Morgan Stanley: ‘Tesla 1Q Deliveries Disappoint: How Much Cash in the Bank?’
Joshua Lott/Getty Images
Price target: $260
The first quarter is shaping up to be one Tesla “may want to forget,” analysts led by Adam Jonas wrote in a Thursday note to clients. But now the company needs to explain its quarterly performance to shareholders who believe in the long-term “disruptor” potential, they added.
The deteriorating mix in vehicles delivered was the biggest negative surprise to Morgan Stanley, which said Model S and Model X volume was roughly 40% below the firm’s forecast.
“Barring a near-term refresh in these models, we would prepare for the remainder of the year’s volume of S and X to remain weak,” analysts wrote.
JP Morgan: ‘5 Reasons Why Tesla’s 1Q Deliveries Report Is So Negative (Including Potential SEC Implications) – Reiterate Underweight’
Matt Debord/Business Insider
Price target: $200 (prior $215)
“Tesla’s 1Q19 vehicle production & deliveries report was substantially worse than expected,” analysts led by Ryan Brinkman told clients Thursday.
The firm drew five conclusions from the delivery figures.
1. Total deliveries of 63,000 missed the analysts’ expectation for 70,500, and suggested “materially less 1Q revenue, margin, and free cash flow.”
2. Vehicles in transit by quarter-end implied underlying domestic demand has fallen.
3. Similarly, a decline in higher-priced Model S and Model X deliveries – totaling 12,000 between them for the first quarter – again suggests slowing demand unrelated to “temporary delivery difficulties.”
4. Tesla’s reaffirmation that it would deliver between 360,000 and 400,000 vehicles this year “appears to clarify official guidance has in fact all along remained at 360-400k,” undermining Musk’s legal defense that he had not provided new information in his February tweet saying production would be 500,000 vehicles.
5. The clear difference between Musk’s outlook and the company’s official guidance “may hurt the perception of management commentary, eroding investor confidence and potentially placing additional pressures on the shares.”
RBC Capital Markets: ‘1Q19 Deliveries Disappoint’
Price target: $210
Analyst Joseph Spak said the delivery numbers were “disappointing across the boards,” and estimated the results could translate into a revenue miss of $1 billion or more.
Specifically, Model S and Model X deliveries falling short of the firm’s expectations was “very disappointing,” and the lowest figure since the third quarter of 2015 when “it was effectively all Model S,” Spak wrote.
He added: “To us, this signals that the tax subsidy cut in the US was a significant hit to these premium vehicles and/or Model 3 is having a bigger cannibalization impact. Either is a problem, in our view.”
Oppenheimer: ‘TSLA: 1Q19 Production & Deliveries’
Price target: $437
“TSLA deliveries disappointed as the company indicated significant volumes were in transit to China and the EU,” analysts led by Colin Rusch told clients on Wednesday. “Of note, Model S/X deliveries fell far short of expectations, which we believe will add fuel to bear arguments about peak demand for those vehicles.”
The firm remained positive on the stock, however, and said Model 3 demand around the world was robust “as sell-in to new geographies looks still to be in early stages.”
Wedbush: ‘Tesla Rips the Band-Aid Off; Deliveries Miss Big-Model 3 a Silver Lining’
Price target: Outperform
“While the Street was expecting a soft quarter given there were a number of wildcards around European logistics and US demand, overall we would characterize this quarter’s delivery metrics as a C-,” analyst Dan Ives told clients in a note on Thursday.
He added: “This was a disappointing performance by Tesla as the company missed the Street’s delivery numbers by 13%.”
Ives said one bright spot the bulls could focus on was that Model 3 deliveries came in “within the area code of Street expectations.”
Tesla said it delivered 50,900 Model 3 vehicles, missing Wall Street’s expectations of 52,450, a miss Ives categorized as “better than feared.”