Analysts are changing their tune on Tesla third-quarter delivery estimates, cutting predictions just days before the EV giant is expected to release quarterly delivery data. However, bulls are already looking ahead to the Cybertruck as a future Tesla stock catalyst. TSLA jumped Friday.
With Tesla likely to report its Q3 deliveries on Monday, Oct. 2, Wall Street is predicting the number will undercut the EV giant's record-setting 466,140 vehicles in Q2. Since the end of July, analysts had forecast Tesla's Q3 would outpace the second quarter.
However, that changed this week with the analyst consensus that Tesla will deliver 461,000 vehicles, down around 2% vs. the late July estimate, according to FactSet. Analysts now believe low vehicle inventory due to price reductions, slowing production and consumer interest turning to the new Model 3 and the Cybertruck will take a toll on Q3 deliveries.
Deliveries of the revamped Model 3 in China are expected to begin in Q4 with the vehicle going on sale in Europe in October. The Cybertruck delivery event has been floated to take place before the end of the year.
Meanwhile, data Tuesday showed there were 13,500 Tesla vehicle insurance registrations in China between September 18-24, up 59% vs. the prior week's 8,500. Tesla China deliveries appear to be lagging behind Q2 numbers on limited supply of Tesla's older Model 3 vehicles.
Tesla stock gained 1.6% to 250.22 Friday during market action. On Thursday, TSLA advanced 2.4% to 246.38. In September, TSLA is down 3%.
Cybertruck Focus
On Friday, Canaccord noted that despite possible downside potential on Tesla Q3 deliveries, the firm is looking past this quarter's delivery number as demand appears relatively healthy despite a "wobbly" auto market and price cuts.
Canaccord sees the third-quarter earnings call, expected around October 18, as more important than delivery data, predicting it should reveal a Cybertruck deliveries timeline and company margin outlook.
Tesla has started sending Cybertruck launch event apparel to employees, Electrek reported Thursday. This appears to be a sign the new vehicle is coming soon.
Tesla Stock: Analysts Expect Delivery Miss
Expect delivery forecasts to keep coming down, as analysts adjust their figures in the final days. Some recent notes state Tesla's Q3 deliveries will come in well below 460,000.
On Friday, Piper Sandler cut its Tesla third-quarter delivery prediction to 445,000 vehicles, down from 515,000. The firm expects lower deliveries based on factory shutdowns "in preparation for launching new products (the updated Model 3 and Cybertruck."
On Thursday, Citi analyst Itay Michaeli also trimmed his Tesla delivery estimate to 450,000 vehicles, down from his previous expectation of 468,500. This follows Deutsche Bank analyst Emmanuel Rosner on Tuesday dropping the firm's price target on Tesla stock to 285 from 300. Rosner also lowered his Tesla delivery prediction to 440,000, down from 455,000.
Moreover, Rosner sees "meaningful downside risk" to 2024 consensus estimates due to limited volume growth. Deutsche Bank expects 2024 deliveries to total 2.1 million, below the current consensus of 2.3 million units. Rosner also sees 2024 EPS of $3.90, which would be below 2022 profit levels.
Meanwhile, Baird analyst Ben Kallo on Tuesday projected Tesla deliveries to total 439,200 vehicles in Q3. Kallo wrote that "planned factory downtime" and "questions regarding demand" have created confusion about which way Tesla deliveries will go.
On Monday, RBC Capital bucked the trend of delivery prediction cuts. The firm raised its estimate for Tesla deliveries in Q3 to 462,000, up from its prior estimate of 454,000 vehicles.
"Situation Appears Stable"
Last week, Barclays analyst Dan Levy wrote that he expects Tesla to deliver 455,000 vehicles and production to be 435,000 vehicles, down from 480,000 produced in Q2.
"Underscoring our expectation for a slight miss is that demand remains soft. Of course pricing actions may have helped offset weak demand to some extent, as we saw ongoing price actions in 3Q," Levy wrote, adding that inventory is likely reduced amid price discounts.
New Street Research analyst Pierre Ferragu added last Friday he expects Tesla to deliver 438,000 units, 5% below the consensus view.
"The sequential decline results from production pauses at all of Tesla's factories over the course of the quarter," Ferragu wrote.
However, Ferragu sounded an optimistic note.
"Overall, the situation appears stable and underlying trends are heading in the right direction," he wrote.
"We anticipate a strong sequential improvement for Tesla in the fourth quarter in both deliveries and gross margin," Ferragu said.
Tesla's Second-Quarter Deliveries
TSLA reported record global deliveries in early July — as price cuts, tax credits and discounts propelled demand well above Wall Street forecasts.
Tesla deliveries ran to 466,140 in the second quarter, sprinting past Q1's record 422,875 and Q4's 405,278. Model 3 and Y deliveries hit 446,915 in Q2. Model S and X deliveries picked up to 19,225. Production hit 479,700, exceeding deliveries once again, even with Tesla curbing output below capacity.
Tesla's global vehicle inventory was 16 days at the end of the second quarter, up one day sequentially and a 300% increase vs. last year.
Meanwhile, Chief Executive Elon Musk told investors during the Q2 earnings call that the company is targeting 1.8 million vehicles deliveries in 2023. However, Musk also warned third-quarter production will likely "be a little down" due to summer shutdowns for factory upgrades.
Analyst consensus, as of September 28, has Tesla full-year 2023 deliveries totaling 1.84 million units, according to FactSet.
Tesla Stock
Last week, Tesla tumbled nearly 11%, skidding below its 50-day line, to 244.88. The shares also round-tripped all of the prior week's gains spurred by the bullish Morgan Stanley call on the EV maker's supercomputer and self-driving prospects.
Tesla stock has a proper cup-with-handle base, giving it a 278.98 buy point, according to MarketSmith analysis.
Ferragu in his note wrote that a Q3 delivery miss will not be a "positive catalyst" for Tesla stock and that investors may have to wait until Q4.
Meanwhile, analysts maintain that the United Auto Workers strike against Ford, General Motors and Stellantis is good news for nonunion Tesla.
Tesla stock ranks fourth in the 35-stock IBD automaker industry group. The S&P 500 component has a 95 Composite Rating out of 99. Shares have an 91 Relative Strength Rating and its EPS Rating is 93 out of 99.
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