Tesla analysts update views after Q3 deliveries

Tesla stock (TSLA) lost 3.5 percent on Oct. 2 after the electric vehicle maker reported third-quarter deliveries of 462,890, up about 6 percent from a year earlier. This marks the first year-over-year increase in quarterly shipments for 2024.

However, the number slightly missed analysts’ estimated shipments of 463,310, according to FactSet StreetAccount data. Tesla’s year-ago period saw deliveries of 435,059 vehicles, with total production of 430,488.

The company also said it produced 469,796 vehicles and deployed 6.9 GWh of energy storage products during the third quarter.

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Tesla shares are down 0.33% year to date, largely underperforming the S&P 500, which is up more than 20%. However, the stock has already recovered from a decline earlier this year caused by weak sales.

Tesla’s first-quarter shipments were tough, with a total of 386,810 units, down 8.5% year-over-year, significantly missing even the most pessimistic analysts’ forecasts. Production in the first quarter was 433,371 vehicles, down 1.7% from the previous year.

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The company cut U.S. prices for its Model Y, Model X and Model S vehicles by $2,000 each in April after first-quarter deliveries to address the increasingly difficult global EV market.

Deliveries of 443,956 vehicles in the second quarter were better than analysts’ expectations, but still represented a 4.8% year-over-year decline.

Tesla is set to release its Q3 financial results after the market closes on October 23.

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Tesla’s energy business is thriving

Tesla will release its third-quarter financial results after the market closes on October 23. In the previous quarter, the company reported earnings of $0.52 per share, missing analysts’ expectations of $0.62.

Second-quarter revenue came in at $25.5 billion, slightly beating forecasts, but auto sales fell 6.5 percent to $19.9 billion.

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Tesla’s core car segment, which accounts for about 78% of its revenue as of Q2, is losing market share to other EV brands. Cox Automotive data shows non-Tesla electric vehicle sales in the US rose 33% in the first half of 2024, while Tesla sales fell 9.6%, InsideEVs reported.

However, the company is thriving in the energy business. In the second quarter, Tesla’s energy generation and storage segment brought in $3 billion in revenue, doubling the $1.5 billion from the same period last year. This segment represents about 12% of Tesla’s Q2 revenue.

William Blair investment bank analyst Jed Dorsheimer initiated coverage of Tesla with an outperform rating in September. He notes that the company is building an energy ecosystem that is “Apple-like” when integrated with its automotive business and future opportunities in areas such as artificial intelligence, robotaxis and robotics.

“We view Tesla Energy as the most underappreciated component of the Tesla story and expect the narrative to shift to the energy storage business in light of tempered EV expectations in the near term,” Dorsheimer said in a note, thefly reported .com.

Analysts’ reactions are mixed

Analysts responded with a mixed outlook following the third quarter shipment report. Baird’s Ben Kallo noted that shipments were lower than the firm anticipated, but noted that energy storage deployments were robust at 6.9 GWh, the second-highest quarterly figure in Tesla’s history.

Baird also expects Q3 deliveries to be an “analysis event”, with attention quickly shifting to the robotaxi event on October 10. .

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Evercore ISI remains more cautious. The company’s analyst Chris McNally called the shipment numbers a “slight disappointment of expectations” given “recently increased” buy-side forecasts to about 470,000 and consensus demand for 462,000 units.

Evercore ISI expects Tesla’s Q3 EPS to fall between 57 and 59 cents, with a gross margin of around 15%. He has an in-line rating on Tesla stock.

Barclays also acknowledged the delivery shortfall, attributing it to weakness in the S, X and Cybertruck models. Barclays maintains an equal weight rating on Tesla with a price target of $220.

Tesla traded at around $249 on October 2nd.

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