Tesla Q4 Deliveries Show Another Big Miss (NASDAQ:TSLA)

One of the worst performing stocks in recent months was Tesla (Nasdaq: TSLA). The electric car maker’s shares are all but tumbled thanks to the drama surrounding CEO Elon Musk’s acquisition of Twitter, but there are concerns. Slowing demand for the company’s vehicles.On Monday, Tesla announced its Q4 production and shipment figuresand that figure is unlikely to allay those sales concerns in the near future.

New records are now expected to be announced every quarter as Tesla continues to open new factories in Germany and Texas, and ramp up production in Fremont and Shanghai. In early 2022, some of the company’s biggest supporters hoped the name would deliver more than half a million vehicles in the last quarter of the year. These expectations have gradually declined due to COVID issues in China and a slower than expected increase in production. Tesla has set new records for both production and delivery, as you can see below.

The first thing to notice is that production has significantly outpaced shipments for the second quarter in a row. Management attributed this to a “continued shift to a more homogenous regional mix of vehicle manufacturing,” with more vehicles in transit at the end of the period. Musk said in early 2019 that Tesla would soon fix a spike in deliveries that resulted in more deliveries in the second half of the quarter. Despite the many opportunities to reorganize the timing of vehicle builds at production facilities, that hasn’t really happened yet in the last three years. As a result, the company surpassed its deliveries in the second half of 2022 by more than 56,500 units. This only adds to concerns about weak demand.

This was the second consecutive quarter that Tesla’s reported shipments were well below estimates. In the chart below, you can see that street estimates have basically hovered at the 430,000 level for most of Q4. In late December, a Tesla investor spokesperson released the usual company-compiled estimate of just under 418,000. The actual figure was about 13,000 units short, even though that number was a bit lower than it was on the streets just a few weeks ago.

The delivery results are even more disappointing when you consider a few key items. That’s a guidance cut in itself, leaving Tesla to grow just over 40% in 2022. Numerous promotions were run throughout the fourth quarter to drive demand. In the US, Tesla pushed him $3,750 in credit late in the quarter, which he eventually doubled to give away 10,000 free Supercharger miles. In China, multiple promotions were detailed throughout the quarter, even after the price cut earlier in the quarter. Tesla has kicked off 2023 by offering another set of incentives in China to offset the removal of China’s EV subsidies.

What will happen to Tesla’s car earnings per vehicle delivered, especially given that all discounts apply when we have Q4 results (including leases and credits) in about three weeks? I am very interested. A lower percentage of Model S and Model X sales will also pose a minor headwind to this average price figure, increasing the percentage of leased vehicles in Q3 2022. Full self-driving revenues, which have been suppressed for years, should offset some of these losses in average revenue per vehicle in the series.

The key number analysts are likely to focus on in the fourth quarter is gross margin. Tesla management has cited inflationary pressures in past conference calls, and discounts certainly won’t help. , the increase in production out of Europe that robs sales of Chinese-made cars and the week-long closure of the Shanghai factory in December could be small. pull. Going into Monday’s release, the analyst had expected fourth-quarter non-GAAP EPS for him to be $1.24, compared to his $1.05 in the third quarter. Given that he’s already lost more than $1 billion since late October, as you can see below, we’ll be keeping an eye on how much the earnings estimates drop.

When it comes to Tesla stock, the news wasn’t a welcome one for those expecting a short-term bounce. Tesla last week closed at around $123, just $15 above its recent multi-year low after surpassing $300 in late September. With a great report he could have pushed the stock back towards the 50 day moving average line which is currently just below $180 but is dropping by the day but in the short term growth appears to be limited. The average target price on the road was $248 as of Monday, down from $336 about eight months ago, but the missed delivery target could be lowered further.

Ultimately, Tesla has missed delivery expectations significantly for the second quarter in a row. Management talks about regional builds, but after years of talking about eliminating end-of-quarter delivery spikes, they haven’t done much yet. At a faster pace, Kuma will speak of sluggish sales alongside a series of promotional efforts. Analyst estimates and price targets are likely to be lowered now, and unless the market as a whole enters the new year with a decent rally, we don’t expect the stock to rebound significantly before earnings results.