A major storm system swept across much of America on Tuesday, but Tesla was showered with red ink.
Harsh winds came out of Wall Street after the world's leading EV maker posted a much weaker-than-expected tally of first-quarter deliveries.
Tesla delivered 386,810 new cars over the three months that ended in March, the company said, down 8.5% from a year ago, and 20% south of the record 484,507 total reached over the three months ended in December.
Analysts' delivery forecasts ranged from 425,000 to around 470,000, with LSEG data pegging the March-quarter target at around 455,000 units.
The company had warned investors in January that vehicle-delivery growth rates would be "notably lower" than 2023 levels. CEO Elon Musk said profit margins would improve only after central bank interest-rate cuts.
Several analysts shared their thoughts after Tesla's lackluster delivery report, including some who overhauled their Tesla stock price targets.
Tesla faces increasing pressure from analysts who are disappointed by its first quarter deliveries data.
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'Tables are turned,' analyst says
“While we were anticipating a bad first quarter, this was an unmitigated disaster that is hard to explain away,” said Wedbush analyst Dan Ives, who held his $300 price target and overweight rating in place following the news.
Ives said he viewed the report “as a seminal moment in the Tesla story” for Musk "to either turn this around and reverse the black eye performance."
“Otherwise, some darker days could clearly be ahead that could disrupt the long-term Tesla narrative," he said.
The Street Pro’s Bruce Kamich said that Tesla “used to be considered a buy-and-hold stock but now the tables are turned. and it looks like a ‘sell on any bounce’ stock.”
“Avoid the long side of TSLA as further declines are anticipated,” he said.
Baird analysts lowered the firm's price target on Tesla to $280 from $300, while keeping an outperform rating on the shares.
The firm said that Tesla reported first-quarter deliveries below estimates, which had been lowered throughout the quarter, as several one-timers impacted production.
However, the firm speculated "that bears will use the lower deliveries as fuel for the demand debate."
Analysts at Deutsche Bank said Tesla's results were significantly below even the firm's Wall Street-low estimate of 414,000 units of deliveries for the quarter.
The firm said the discrepancy between deliveries and production implies 46,000 in incremental inventory, which confirms that there may also be a "serious demand issue beyond the known production bottleneck."
The production figure was predictably soft, but the miss was in deliveries, likely largely due to demand issues in the U.S., according to the firm. It believes the quarter's volume creates downside risk to gross margin expectations.
Tesla most recently raised prices in the U.S. and China, but it may have to revert, posing further downside risks to selling prices for the rest of the year, said Deutsche Bank, which has a buy rating on the shares with a $200 price target.
RBC Capital analyst Tom Narayan said the electric vehicle slowdown underway in the U.S. is likely a factor in Tesla's deliveries being "much softer than expected."
Musk has said that “Tesla should really be thought of as roughly a dozen technology startups, many of which have little to no correlation with traditional automotive companies.”
Analyst values Tesla's energy business
RBC, which has an outperform rating on the shares with a $298 price target, said it continues to value Tesla's energy business above the car business given its higher profitability levels and growth profile.
Indeed, while the company posted disappointing delivery figures, Tesla also said it had deployed 4,053 MWh of energy storage products in the first quarter, the highest quarterly deployment yet.
Tesla deployed 3,889 MWh a year ago and 3,202 MWh in the fourth quarter of 2023.
The company is building a second dedicated factory for the Megapack, a large-scale, lithium-based battery energy storage product, in Shanghai, following a plant in Lathrop, Calif. Tesla's EV facility in Nevada can also make the Megapack.
RBC also said that it values autonomy above the car business and believes that the full self-driving free trial could potentially be more important for the Tesla investment thesis in the longer term than the quarter's delivery miss.
Musk recently told Tesla employees that it would be "mandatory" for its North American operations to "install and activate" Full Self-Driving software in new Tesla vehicles, and to "take customers on a short test ride before handing over the car."
"Almost no one actually realizes how well (supervised) FSD works," Musk wrote in a memo. "I know this will slow down the delivery process, but it is nonetheless a hard requirement."
Tesla has claimed to have data based on around 300 million miles of driving, a figure Musk said last year would “soon be billions of miles and tens of billions of miles.”
This would provide a huge competitive advantage for the company as it ramps up investments in AI and other technologies to harness its potential.
"Most people still have no idea how crushingly good Tesla FSD will get," Musk posted on X, formerly Twitter, which he also owns, on March 29, "It will be superhuman to such a degree that it will seem strange in the future that humans drove cars, even while exhausted and drunk!"
"Cars will take you where you want automatically, just like getting in an elevator and pressing a button, something that also used to be manual.
