Tesla's Deliveries Missed the Mark. Why Analysts Aren't Worried

Tesla(TSLA.US)

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By Angela Palumbo

$Tesla(TSLA.US)$ stock dropped on Monday after the electric-vehicle company disclosed delivery figures that fell short of Wall Street forecasts, but at least some analysts see reason for optimism.

On Sunday, Tesla reported that it delivered 343,830 cars and produced 365,923 in the third quarter. The deliveries were a jump compared with the 254,695 vehicles Tesla handed over to customers in the second quarter, but still below Wall Street estimates. The company said that deliveries have historically been skewed toward the end of each quarter, and that as "production volumes continue to grow, it is becoming increasingly challenging to secure vehicle transportation capacity and at a reasonable cost during these peak logistics weeks."

Tesla shares were down 7.3% to $245.98 in early trading Monday, bringing the loss so far this year to 30%. Coming into Monday trading, the stock has fallen 25% in 2022.

Wedbush analyst Daniel Ives, who rates the stock at Outperform with a target of $360 for the price, described the result as "nothing to write home about," and said that Wall Street is likely to be disappointed. "That said, we view this more of a logistical speed bump rather than the start of a softer delivery trajectory into the [fourth quarter and 2023] and remain bullish on the Tesla story," he wrote.

Truist Securities analyst William Stein rates the stock as a Buy. He raised his 12-month price target to $348 from $333, citing the company's potential success with artificial intelligence.

In terms of deliveries, Stein said Tesla "noted that during [the third quarter] it began to transition away from large end-of-quarter deliveries to a more even regional mix of vehicles builds each week, which increases the number of cars in transit at the end of each quart."

"We expect this will make the [third quarter] deliveries shortfall appear like a temporary dip with a larger [fourth quarter] recovery."

-Stein wrote.

J.P. Morgan analyst Ryan Brinkman, however, rates the stock as Underweight with a $153 price target.

"We remain wary on valuation and continue to see large downside (-42%) to our price target, including on the potential for multiple compression amidst rising competition and less distinction vs. traditional automakers over time."

-Brinkman wrote.

Tesla will report its third-quarter financial results after the market closes on Oct. 19.