Tesla: Wall Street reacts to Q4 delivery miss
Tesla stock is starting 2023 on the wrong foot after the automaker reported a delivery miss for the fourth quarter.
Tesla delivered 405,278 vehicles globally for the quarter, missing analyst expectations of 420,760 as compiled by Bloomberg. For the quarter, Tesla produced 439,701 vehicles, a number that exceeded deliveries by 34,423 vehicles.
Tesla explained the rising difference between deliveries and units produced, claiming it “continued to transition towards a more even regional mix of vehicle builds which again led to a further increase in cars in transit at the end of the quarter.”
For the year, Tesla deliveries climbed 40% to 1.31 million units, representing an all-time high for the company, though shy of its 50% growth rate the company has targeted, though last quarter the company hinted it may fall short of that goal.
Nevertheless, Wall Street analysts are weighing in on the quarterly miss, and some are concerned about demand.
“Although the soft Q4 outcome isn’t entirely shocking given recent China COVID developments, the delivery miss (vs reduced estimates and post recent price actions) will likely escalate concerns over [near term] macro/competitive demand pressures at a time when Tesla is adding significant capacity on existing products,” Citi analyst Itay Michaeli said in a note today. “Until gross margin visibility improves (Q4 results on Jan 25th), the stock might struggle to regain meaningful ground, and it doesn’t help that U.S. IRA guidelines appear to limit the $80k price cap to just the three-row Model Y variants.”
Wedbush’s Dan Ives, once a noted Tesla bull, has grown sour in recent months over Tesla’s stock performance. He is still concerned following the Q4 delivery report.
“Tesla is held to a higher standard and a miss is a miss and the bulls are not popping champagne on these numbers with now the big question around the 2023 demand/delivery picture,” he said in a note this morning. “With Tesla not reporting 4Q earnings/guidance until late January the debate will now rage on the Street around the 2023 Street outlook with deliveries likely in the 35%-40% range for 2023 as Musk & Co. need to lay out a more conservative number to hit in this jittery backdrop and rip the band-aid off guidance.”
On the flip side, a few Wall Street analysts are impressed with what Tesla has done operationally given a number of headwinds, and are focused on the company’s future prospects.
Deutsche Bank’s Emmanuel Rosner cut his price target from $270 to $250, but is still bullish on Tesla’s 2023 growth story. “We note that production in the quarter totaled 439.7k units which represents a q/q growth of +20%, and that both production and deliveries represented all-time records,” he wrote in a note today. “For the full year, Tesla delivered 1.3m vehicles, +40% y/y which is below the company’s longer-term target of 50% CAGR but we think it still represents a solid result in the midst of Covid lockdowns, supply chain challenges, as well as rising macro weakness and challenging consumer environment especially in China.”
CFRA’s Garrett Nelson reiterated his “Strong Buy” rating for the stock following the Q4 report, despite the miss on those delivery and production numbers.
“After a difficult year for EV manufacturer equities such as Tesla, Lucid, and Rivian, we are bullish on TSLA in 2023 with a potential stock buyback looming, lower-priced versions of the Model 3 and Model Y having now become eligible for the $7,500 federal EV tax credit,” Nelson wrote today, clearly focused on Tesla’s road ahead. “[We] see its volumes hitting new record highs as Austin and Berlin continue to ramp up and it achieves first deliveries of the Cybertruck, which boasts the industry's strongest order backlog of any forthcoming EV model.”
Speaking of future prospects, Tesla announced that it will be holding its 2023 Investor Day in Austin, Texas, on March 1. The company says it will discuss long-term expansion, capital allocation plans, and reveal its “generation 3 platform” during the meeting.
Correction: an earlier version of this story reported Tesla 20deliveries climbed 22% for the year; this has been corrected to 40%.
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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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