Elon Musk Attributes Decline in Deliveries to Challenging Quarter for Industry

Elon Musk Attributes Decline in Deliveries to Challenging Quarter for Industry

After You’re here (TSLA) reported worse-than-expected first-quarter vehicle deliveries on Tuesday, analysts cut their full-year profit forecasts, with the consensus falling $1.00 since the end of 2023. Shares of TSLA traded lower on Wednesday after falling on Tuesday. However, Cathie Wood and her ARK Invest funds continued to load up on Tesla shares on Tuesday, making big purchases in back-to-back trading sessions.


Tesla stock fell slightly on Wednesday.

Tesla’s first-quarter deliveries of 386,810 fell short of lowest estimates and marked the lowest quarterly figure since 344,000 in the second quarter of 2022. The result was sharply criticized by both bulls and bears. Tesla blamed the first quarter’s performance on ramping up production of the updated Model 3 as well as factory closures.

Longtime TSLA supporter Ross Gerber, who runs Gerber Kawasaki Wealth and Investment Management, posted on X, formerly Twitter, that CEO Elon Musk should be in the firing line.

Gerber wrote that Tesla’s board should be replaced “immediately” with independent directors.

“It is time for shareholders to assess responsibilities,” he wrote.

Musk responded, calling Gerber an “idiot” and saying it was a “tough quarter for everyone.” Tesla chief pointed the finger at his Chinese rival BYD (I WILL) which saw its sales fall by more than 40% in the first quarter compared to the fourth quarter.

BYD’s BEV sales fell 43% from the fourth quarter, with overall sales down 34%. But overall BYD and BEV sales climbed 13% from a year earlier, with strong gains in March.

Tesla China competes with Nio, Li Auto and XPeng up on March deliveries

HSBC on Wednesday lowered its price target on Tesla to 138 from 143 and maintained a reduced rating on the shares. The company added that Tesla has cut prices by 9% on average since the start of the year, but that cheaper cars don’t necessarily lead to higher volumes.

Meanwhile, Baird also lowered his price target on Tesla from 300 to 280 on Wednesday, with an outperform rating. The company believes that “several one-off events” impacted first-quarter production, but it speculates that bears will use the decline in deliveries as fuel to fuel the demand debate.

Wedbush Securities analyst Dan Ives, a longtime Tesla buyer, on Tuesday called the quarter a “total disaster” for Tesla that was “hard to explain.”

“We view this as a pivotal moment in Tesla’s history for Musk to turn things around and reverse the black eye’s first quarter performance,” Ives wrote Tuesday. “Otherwise, darker days could clearly lie ahead and disrupt Tesla’s long-term narrative.”

Tesla stock fell 0.6% to 165.60 in early trading market action Wednesday. On Tuesday, shares fell 4.9% to 166.63. Meanwhile, Cathie Wood purchased 234,998 shares of TSLA stock on Tuesday, according to the company’s daily trading disclosures. On Monday, Cathie Wood purchased 84,164 shares.

EPS forecast for the full year, but for the second quarter?

With the first quarter over, analyst consensus now estimates that Tesla’s 2024 earnings are significantly below the 2023 level. This signals another year of declining earnings for this growth stock. Wall Street currently expects Tesla earnings per share to be just $2.81 in 2024, according to FactSet. That would represent a 10% drop from last year’s $3.12.

Wall Street’s 2024 consensus EPS estimates for Tesla are now down more than 26% since the end of 2023. As Tesla reports earnings on April 23, Wall Street is likely just starting to trim its earnings forecasts. Some analysts believe earnings could fall further, potentially around 2021 EPS of $2.26.

Longer term, Wall Street consensus estimates that Tesla’s EPS in 2025 will be $3.85, up from $5.29 at the end of 2023, according to FactSet.

However, with Q1 deliveries completed, Tesla’s operations are expected to resume in Q2 with an increase in Model 3 and Cybertruck sales in the United States. Sales in China could recover after a seasonally slow first quarter, even as competition has intensified around the world. the largest market for electric vehicles.

Wall Street is currently forecasting deliveries of 498,000 units in the second quarter.

Meanwhile, Tesla increased its prices in the United States for all versions of the Model Y on April 1. Tesla increased prices for European Model Y vehicles on March 22. In China, Tesla raised prices for its entire Model Y lineup by about $690 on April 1, even as some incentives expired.

But on April 3, Tesla China announced 0% financing for Model 3 and Model Y.

To maintain sales momentum in 2023 into 2024, Tesla has aggressively reduced vehicle prices and offered discounts. As a result, automotive gross margins, which peaked at 30% in the fourth quarter of 2021 amid an industry chip shortage, have fallen well below 20%.

Tesla continues to enjoy deep discounts on in-stock Model Y vehicles in the United States and other markets.

Tesla shares plunged in 2024, but at least it’s cheaper, right? No

Tesla Stock Performance

Last week, Tesla stock rose 2.9% to 175.79, posting a second consecutive weekly gain as the electric vehicle company began rolling out its latest Full Self-Driving (FSD) update to client. TSLA shares are trading below the 50-day moving average.

Emails sent by Elon Musk have leaked on social media platforms, showing that he is making it mandatory in North America to install and activate the latest version of FSD on vehicles and that he is taking customers do a “short test drive before returning the car”.

Tesla is also offering a free one-month trial of FSD in the United States for new purchases or existing FSD-enabled electric vehicles.

On March 15, Tesla stock fell 6.7% to 163.57, hitting new 2024 lows and levels not seen since May 2023. TSLA fell about 13% in March and is the the biggest loser in the S&P 500 index so far in 2024.

The electric vehicle giant ranks eighth in the 35-member IBD. Automotive Manufacturers Industry Group. The stock has a 33 Composite score on a best possible 99. Tesla stock also has a 10 Relative Strength Rating and a 67 EPS rating.

Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.


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