4 Analysts Discuss Tesla Stock After Q4 Deliveries Miss Estimates; Shares Drop

By Senad Karaahmetovic

Tesla’s shares experienced a decline of over 3% in pre-market trading on Tuesday following the company’s announcement of its fourth-quarter 2022 deliveries, which totaled over 405,000 units—falling short of analyst expectations.

On a year-over-year basis, vehicle deliveries saw an impressive growth of 40%. However, the overall production growth for 2022 was 47%, slightly below Tesla’s targeted increase of 50%. The company reported producing more than 439,000 electric vehicle units in the fourth quarter, also reflecting a 47% year-over-year increase.

In a press release, Tesla acknowledged an ongoing shift towards a more balanced regional distribution of vehicle production, which contributed to a rise in the number of cars in transit by the end of the quarter.

Market analysts had anticipated delivery figures in the range of approximately 431,117 vehicles, with some estimates falling as low as 420,760.

According to Goldman Sachs, Tesla’s fourth-quarter delivery numbers did not meet buy-side consensus, labeling the report as “an incremental negative.” Consequently, they adjusted their price target for Tesla stock to $205, down from $235 per share. Nonetheless, they maintained a Buy rating, citing the company’s strong position for long-term growth as a leader in the clean mobility and electric vehicle market.

JPMorgan also revised their price target for Tesla, lowering it from $150 to $125 per share while reiterating an Underweight rating. They noted that supply constraints that impacted deliveries in previous years are unlikely to affect Tesla in 2023, suggesting that any significant delivery shortfall could negatively impact long-term investor sentiment.

Analysts from Vital Knowledge commented that while the delivery number of 405,000 was not entirely unexpected, it represented a modest positive outcome. They noted, “Not that we think Tesla is a screaming buy by any means, but extremely subdued earnings expectations is one reason we’re more bullish than the consensus on the broader market.”

Citi analysts acknowledged that while the soft fourth-quarter results were somewhat anticipated due to recent developments in China, the delivery miss could intensify concerns regarding macroeconomic and competitive demand pressures. They highlighted that, with approximately 30 times the consensus earnings per share for 2022 and the already negative sentiment surrounding the stock, much of the bad news might already be reflected in the share price. However, they warned that Tesla stock may struggle to recover until there is improved visibility on gross margins.

Overall, Tesla’s stock experienced a significant drop of 65% in 2022.