Tesla just reported lower-than-predicted vehicle deliveries for the third quarter of 2022, marking a substantial decline from the company’s record Q2 numbers. But Wall Street analysts remain optimistic about Tesla’s growth prospects, eyeing an imminent Cybertruck launch and the potential for a strong Q4 rebound.
The headline numbers: Tesla produced 430,488 vehicles and delivered 435,059 in Q3, down 6% from Q2’s figures. Tesla blamed “planned downtimes for factory upgrades” that CEO Elon Musk had warned about. The company delivered 15,985 higher-end Model S and Model X vehicles, along with 419,074 mass-market Model 3 and Model Ys.
Tesla reiterated its goal to deliver around 1.8 million vehicles globally in 2023. But Q3 deliveries fell short of analyst predictions, which averaged around 461,000 according to FactSet. Some estimates had pegged the Q3 delivery figure closer to 455,000 before the official announcement.
Tesla’s Stock Price Dips Slightly
In Monday premarket trading after the delivery announcement, Tesla’s stock price sank around 3% to $242 per share. On Friday, TSLA closed at $250, up 1.6% for the day. Tesla will report full Q3 earnings and hold its quarterly earnings call around October 18, which could spur more significant stock moves.
The lower-than-expected Q3 delivery numbers clearly reflect Tesla’s move to temporarily halt production at some factories for upgrades related to the refreshed Model 3 in China and the upcoming Cybertruck. But slowing output also helped Tesla pare down vehicle inventory levels that had grown too high.
New Upgraded Model Y Launches in China
Coinciding with the Q3 delivery announcement, Tesla launched a slightly updated Model Y crossover SUV in China on Sunday. The base and Long Range variants now tout improved driving range. However, the Model Y faces intensifying competition in China from rival EV crossovers with high specs and often lower prices.
Cybertruck Launch Key for Tesla Bulls
Even before the Q3 letdown, Tesla bulls like influential analyst Dan Ives of Wedbush Securities downplayed the quarter’s delivery figures. Ives argues Tesla is poised for strong growth in Q4 and beyond as the long-awaited Cybertruck finally enters production.
“We are now set to be entering the next stage of growth for Tesla globally with the Model 3 refresh front and center in China and the Cybertruck production set to kick off beginning around Halloween,” Ives wrote last Friday.
But some analysts take a more cautious view. Emmanuel Rosner of Deutsche Bank trimmed his Tesla price target to $285 from $300 last week. Rosner predicted Q3 deliveries around 440,000 and warned of “meaningful downside risk” to 2024 estimates. Deutsche Bank sees 2024 deliveries of just 2.1 million vehicles, below the 2.3 million consensus.
Record Q2 Deliveries Fueled by Discounts
Tesla’s Q3 decline follows a blockbuster Q2, when the company leveraged discounts, tax credits and other incentives to propel deliveries far beyond expectations. Tesla delivered 466,140 vehicles globally in Q2, crushing its prior Q1 record of 422,875. The vast majority were Model 3 and Y crossovers, totaling 446,915.
CEO Elon Musk said during Tesla’s Q2 earnings call that 2023 deliveries should reach about 1.8 million. Consensus analyst forecasts agree, with FactSet predicting 1.84 million Tesla deliveries this year as of late September.
Tesla Stock Showing Signs of Strength
Year to date, Tesla stock is down over 30%. But shares notched a 2.2% gain last week, briefly topping the 50-day moving average line on Friday before pulling back. Decisively clearing the 50-day average could give investors an early entry point.
According to MarketSmith chart analysis, Tesla stock has formed a proper cup-with-handle base, with a buy point currently at $278. Meanwhile, the United Auto Workers strike against Detroit automakers Ford, GM and Stellantis may benefit non-union Tesla.
Among automaker stocks, Tesla ranks fourth by market cap. It boasts a 95 Composite Rating from Investor’s Business Daily, indicating strong technical and fundamental metrics relative to sector peers.
While Tesla’s Q3 delivery figures may disappoint, the electric vehicle leader appears to have plenty of upside potential. With the long-awaited Cybertruck in sight and exciting new technologies on the horizon, Tesla remains a compelling opportunity for patient long-term investors.
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