Tesla stock drops 6% after deliveries figure as production outpaces demand

The stock was on pace for its largest one-day percentage drop in a month, and traded as low as $193.83.

It was the second worst performer on the S&P 500 index
SPX,
-0.01%,
the worst performer on the Nasdaq-100
NDX,
-0.87%,
and the most active on both.

Tesla disclosed 10,695 deliveries of the Model S and Model X vehicles and 412,180 deliveries of Model 3 and Model Y vehicles.

“The Model S/X results were disappointing in our view,” analysts at TPH & Co. said in a note Monday. The analysts expected deliveries of about 18,800 of those pricier Teslas. The sales and the production numbers for the Model X and Model S are “potentially suggesting more price cuts may be needed to incentivize demand,” they said.

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In addition, investors “will be gauging whether price cuts for the Model 3/Y are able to sustain demand levels seen in Q1’23 or if it was potentially a pull forward,” they said.

Compact SUV Model Y “is becoming increasingly important to forecast as demand for the Model 3 remains relatively subdued based on the data we track globally,” the analysts said.

Tesla also guided for 2023 volume of around 1.8 million units and reiterated that the Cybertruck, its electric pickup, is on track to begin production later this year.

“We viewed the guidance as mixed,” CFRA analyst Garrett Nelson said. Volume guidance was shy of CFRA’s estimate “and potentially conservative but the fact the Cybertruck is on schedule is a big positive.”

“[Tesla] remains a top pick and we forecast the combination of its recent price cuts and new EV tax credit eligibility will boost demand and help crush the sales prospects of many competing EV models,” Nelson said.

Itay Michaeli at Citi highlighted the spread between deliveries and production. Tesla made 441,000 vehicles in the quarter, exceeding deliveries, its proxy for sales, by some 18,000 vehicles.

A “growing spread between production and deliveries,” of about 74,000 in last three quarters, “will likely maintain focus on the potential for further pricing pressure in (the second quarter), particularly under the current macro backdrop,” Michaeli said.

Investor concerns about “Tesla’s demand, pricing and margin
trajectory could continue in the next few quarters,” as Tesla’s next-generation vehicle platform since the next-gen platform is not arriving until late next year at the earliest, said Deutsche Bank analyst Emmanuel Rosner.

Rosner also mentioned the potential additional price cuts further pressuring Tesla’s margins.

“Wait times for Tesla vehicles in many regions have shrunk, in the context of a deteriorating macro environment globally and steep competition in China, increasing the likelihood of additional Tesla price cuts,” Rosner said.

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Longer term, as long as Tesla “executes on its cost and efficiency
initiatives in the next gen platform, the company will deepen its competitive moat and grow its lead in the electrification space,” the analyst said.

Shares of Tesla have lost 46% in the past 12 months, compared with losses of around 10% for the S&P 500 index.

The stock has far outperformed the S&P in the past three months, however, up 80% compared with gains of about 7% for the broader index.