Sales numbers for Tesla Inc. and other EV makers on Monday failed to boost the companies' stocks, underscoring investors' concerns about production wrinkles and profit margins.
Tesla $(TSLA)$ reported third-quarter deliveries Monday that were well below already-lowered expectations, sending the stock lower by as much as 3%. However, the shares ended 0.55% higher after full-year guidance reassures investors. Tesla remains committed to the target of 1.8 million deliveries for the year.
Delivery estimates for Tesla had come down in recent weeks due to a Model 3 refresh in some regions, but Tesla "still missed most-recently-reduced expectations," Citi analyst Itay Michaeli said in a note Monday.
Quarterly production, broadly in line with forecast, implies "limited" destocking quarter-on-quarter, which implies "flattish" inventories, Michaeli said. That could weigh on sentiment about gross margins by the end of the year, the analyst said. Michaeli kept Citi's neutral rating on the shares.
Tesla said it produced 430,488 vehicles during the third quarter and delivered 435,059 vehicles. Production was up 17.6% from 365,923 EVs produced a year ago while deliveries increased 26.5% from 343,830.
The FactSet consensus for deliveries was 461,000, which has declined from 462,000 last week and from 470,000 at the end of August.
Analysts had been lowering their expectations amid concerns over slowing demand in China, as the lower-priced Model 3 was getting a refresh and given expectations of limited volume growth.
Tesla's sales were likely hit by longer-than-expected factory downtime in Shanghaiand Austin, Texas, likely causing about 20,000 vehicles to shift into the fourth quarter, Wedbush analyst Dan Ives said.
"Even when factoring in the shutdowns with no rose colored glasses Tesla clearly missed Street estimates this quarter with bulls left disappointed, although we see better days ahead" for fourth quarter and 2024, he said.
Also Monday, EV startup Rivian Automotive Inc. $(RIVN)$ reported its quarterly sales, and unlike Tesla, Rivian beat Wall Street expectations by a large margin. But the stock was 2.55% lower on Monday trading.
Rivian produced 16,304 vehicles at its manufacturing facility in Normal, Ill., and delivered 15,564 vehicles during the quarter. The FactSet consensus was for deliveries of 14,000 vehicles.
The tightening gap between production and deliveries is "clear demonstration of continued demand strength" for Rivian's electric SUV R1 and electric delivery vans, Truist analyst Jordan Levy said in a note Monday.
Earlier stock weakness was "a prime example of the negative sentiment headwinds EV pure-plays continue to face," Levy said.
Analysts at Evercore ISI raised their rating on Rivian stock to the equivalent of buy and increased their price target on the stock to $35, an upside of about 40% over Monday's share prices.
Rivian "has a brand that has stuck the U.S. landing, and most importantly within segments everyone already wants," such as SUVs, trucks and vans, Evercore analyst Chris McNally said.
Rivian has "executed on both cost and delivery targets, derisking the path to break even," McNally said.
The next six months could see Rivian becoming a $35 stock on a production ramp, breakeven gross margins, and "perhaps most importantly" the reveal in the first half of next year of R2, Rivian's compact SUV expected to cost $40,000 to $60,000 and be the first Rivian vehicle to achieve high volume, the analyst said.
Tesla's stock has doubled in the year to date, while shares of Rivian have gained 35% in the same period. That compares with an advance of about 12% for the S&P 500 index SPX so far this year.