Tesla Investors Remain Cautious Amid Delivery Concerns
Tesla investors continue to express concerns over the company's delivery numbers. However, these concerns have not yet prompted them to sell their shares. Instead, they are willing to hold on and observe the performance of the company in the upcoming fourth quarter.
According to an announcement by the Chinese Passenger Car Association, Tesla delivered 74,073 units from its Shanghai plant in September. This figure represents a slight decline from the approximately 84,000 units delivered in August and the roughly 83,000 units delivered in September of the previous year.
It is important to note that these figures include cars exported from China, primarily to Europe, as well as domestic sales. The monthly export volume from China depends on regional demand and production levels at Tesla's German plant.
Although declining production is not ideal for investors, it is worth mentioning that Tesla recently updated its Model 3 sedan in Europe and China. An updated version of the Model 3 is also anticipated to be released in the United States later this year. Tesla, however, did not provide any comment regarding the timing of the Model 3 release in the U.S.
The introduction of an upgraded car has created some challenges for sales of the older Model 3. As per Citi analyst Jeff Chung's analysis of insurance registration data, Tesla sold approximately 240 Model 3 sedans in China from September 11 to September 17. This figure is considerably lower compared to the typical weekly sales range of 2,000 to 3,000 units.
The transition to the new model and planned factory downtime are the primary factors contributing to Tesla's delivery of only about 435,000 units in the third quarter. This fell short of Wall Street's expectations, which were around 455,000 units.
Tesla Stock Holds Steady Despite Delivery Dip
Investors have shown resilience towards Tesla stock despite a recent decline in deliveries. Since September, Tesla stock has actually increased by approximately 1%, while the S&P 500 has declined by about 4%. Investors remain optimistic that trends will reverse in October and continue to improve throughout the rest of the year.
Market analysts are anticipating that Tesla will deliver 485,000 units in the fourth quarter, which would bring the year-to-date total to over 1.8 million units. This represents a significant increase of about 40% compared to the previous year.
Although Tesla stock experienced some weakness on Monday morning, with shares decreasing by 1.5% in premarket trading, the S&P 500 and Nasdaq Composite futures also faced declines of 0.7% and 0.8%, respectively.
In addition to the delivery news, Wells Fargo analyst Colin Langan decided to lower his price target for Tesla by $5 to $260. Langan currently rates the shares as Hold. Langan questions whether waiting to see the outcome of the fourth quarter is worth the potential gain, given his expectation of reduced prices causing a surge in fourth-quarter volume alongside thinner profit margins.
Despite this bearish outlook, the average analyst price target for Tesla stock, according to FactSet, is approximately $255. Interestingly, Tesla stock often trades above the average analyst target price.
Overall, approximately 42% of analysts covering Tesla stock rate it as a Buy. It's important to note that the average Buy-rating ratio for stocks in the S&P 500 is approximately 55%.
All Rights Reserved © 2024
Post a comment