Tesla deliveries set to hit another record high in Q2, so why the wave of TSLA stock downgrades?

You’re here (TSLA) is expected to release second-quarter global shipping data this weekend, giving investors an idea of ​​how the company’s policy of price cuts and discounts has been successful in attracting consumers to the brand. Meanwhile, Tesla stock was downgraded four times before the release as analysts expected vehicle prices to continue to weigh on gross margins.


Tesla is expected to announce record second-quarter deliveries, likely on Sunday, July 2. Wall Street expects Tesla deliveries to rise 74% to 445,000, according to FactSet. The sharp year-over-year increase reflects easy comparisons with the second quarter of 2022, when Tesla’s factory in Shanghai was closed for Covid shutdowns for several weeks. Additionally, factories in Berlin and Austin, Texas were slowly ramping up production.

On Monday, Deutsche Bank raised its TSLA share price target from 200 to 230 and maintained a buy rating on the stock.

The company revised its estimate for second-quarter shipments to 448,000 units, above analyst consensus. Deutsche Bank expects around 168,000 vehicles sold in North America, 153,000 in China, 87,000 in Europe and 23,000 in the rest of the world.

Meanwhile, Guggenheim also raised the company’s price target on Tesla shares to 112 on Monday from 105, retaining a sell rating. Guggenheim expects 446,000 units to be delivered in the second quarter. The company believes that end-of-quarter vehicle incentives and rebates could boost sales.

The two increases in Tesla’s share price come as the global electric vehicle giant suffered four downgrades, including revisions from Goldman Sachs and Morgan Stanley, in the past six days.

Tesla stock fell 6.1% to 241.05 during Monday’s trading, approaching the 21-day line with above-average volume. On Friday, shares fell 3% to 256.60. Last week, TSLA fell 1.5%. Shares are up about 20% in June.

Tesla is trying to move its inventory

Tesla worked to move inventory before the end of the quarter, offering discounts and offers through the end of June.

In mid-June, the electric vehicle giant began offering customers who order a Model 3 between June 14 and June 30 three months of unlimited free boost, according to the company’s website.

In China, Tesla is again offering insurance subsidies on Model 3 vehicles. Customers in China who purchase and complete delivery of an in-stock Model 3 rear-wheel-drive vehicle before the end of June will be eligible for an insurance subsidy. insurance of about $1,120, according to CnEVPost.

Tesla also secured all Model 3 vehicle trims eligible for the full $7,500 tax credit under the Inflation Reduction Act (IRA) in early June. Tesla Model 3 and Model Y vehicles are all eligible for the $7,500 tax credit.

Tesla stock: very high expectations for deliveries in 2023

Analysts expect Tesla’s 2023 deliveries to reach around 1.82 million, up from 1.313 million in 2022.

In April, Tesla Chief Executive Elon Musk told analysts that Tesla was “comfortable” with its 2023 production target of 1.8 million. However, he played down the 2 million production number he used at the end of the fourth quarter.

“These are unstable times,” Musk said. “From a production perspective, if things go well, we have a chance of reaching 2 million vehicles here.

Tesla has not given a delivery target for 2023.

In the first quarter, Tesla deliveries rose 36% from a year earlier to 422,875. That was 4% above the previous record of 405,278 in the fourth quarter. However, Wall Street expected around 431,000 deliveries from Tesla. First quarter deliveries included 412,180 Model 3 and Y vehicles, as well as 10,695 Model S and X luxury vehicles. Production again exceeded deliveries, at 440,808. Model S and X production was 19,437 .

The Tesla Model Y was the world’s best-selling vehicle of any type in the first quarter, according to data compiled by industry analyst JATO Dynamics for Motor1. The Model Y recorded 267,200 sales in the first quarter, according to data from 53 markets and estimates for the rest of the world.

Tesla only has four models, with the bulk of its sales being the Model Y crossover SUV. However, the Cybertruck is expected later this year. There’s also the specter of a revamped Model 3. However, it is unclear what the changes will be.

This Cathie Wood action even surpasses Tesla

Tesla Stock

Tesla shares are up 96% in 2023 and 137% from their Jan. 6 low. However, Tesla is down sharply from the all-time high of 414.50 it hit in November 2021.

Tesla is well extended beyond a buy point of 207.79 from what is either a cup or a double bottom base. It is possible that TSLA is relying on consolidation dating back to late September. However, Tesla could use a handle with a certain length and depth.

Stocks are around 23% above their 200-day line, even with the recent pullback.

Analysts continue to worry about price declines weighing on gross margins and TSLA’s valuation.

On April 19, Tesla reported a sharp decline in first-quarter earnings, while revenue lacked views. The global electric vehicle giant’s profit margins also fell below 20% as the company implemented an aggressive price reduction strategy in the first part of 2023. Tesla saw a 24% increase in its revenue to reach $23.33 billion with earnings of 85 cents per share, a decline of 20%. compared to 2022.

The electric vehicle company’s total gross margin was $4.5 billion, with Tesla’s gross margin at 19.3%, down from 23.8% in the fourth quarter and 29.1% a year earlier. early.

Automotive gross margins excluding regulatory loans and leases slipped to 18.3% from 23.8% in the fourth quarter. That remains below the 20% gross margin “floor” that Tesla previously targeted.

Tesla stock ranks third in IBD’s automaker industry group. He has a composite rating of 99 out of 99. Tesla has a relative strength rating of 92 and his EPS rating is 93 out of 99.

Please follow Kit Norton on Twitter @KitNorton for more coverage.


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