Tesla’s Performance Under Scrutiny: Analyst Expresses Concern Ahead of Q1 Deliveries

Tesla May Face Delivery Miss

The anticipation is palpable as Tesla, Inc. (TSLA) gears up to unveil its first-quarter deliveries next week. However, the mood is somewhat somber, with prominent figures like Gary Black of Future Fund pointing out the looming possibility of Tesla missing the mark by a significant margin.

Analyst Cautions on Volume

Gary Black has voiced his concerns over Tesla’s first-quarter numbers possibly falling well short of the consensus estimate of 468,000 units. Black foresees the volume hovering around 425,000 units, a figure in line with the previous year’s delivery of 423,000 units.

He noted that Tesla is expected to release its Investor Relations-compiled consensus ahead of the anticipated announcement on April 2.

Challenges Ahead

Despite potential forgiveness for the first-quarter shortfall due to a Model 3 refresh at the Fremont factory, Black highlighted worries about the second quarter. With 466,000 units sold in the same period last year, surpassing this figure might pose a challenge, possibly leading to further price reductions by the company.

Black, who recently decreased exposure to Tesla in his firm’s portfolio, scrutinized the implications of the soft performance on investors, particularly questioning the price-to-earnings multiples investors assign to a company experiencing minimal growth.

Investor Concerns Addressed

Black emphasized that Tesla’s earnings and volume growth projections for 2024 and 2025 appear precarious. He pondered on the P/E multiples investors may apply to a company with stagnant growth figures, noting the vulnerability of Tesla’s valuations based on earnings forecasts for the coming years.

He further discussed the potential impact of Tesla’s full self-driving technology achieving Level 4/Level 5 automation, suggesting a path to improved valuation if the company assumes liability for any resulting damages. Nonetheless, Black hinted that Tesla’s management is yet to reach this milestone.

Market Response

Tesla’s stock closed down 1.15% at $170.83 on Friday, reacting to speculations of production cuts at its Giga Shanghai facility. Year-to-date, the stock has experienced a notable decline of over 31%, painting a challenging picture for the electric vehicle giant.

The road ahead seems uncertain for Tesla, as analysts and investors closely watch the company’s next moves amidst evolving market conditions.