Tesla delivery-target miss shows ‘demand cracks clearly happening’ that mean ‘numbers could materially reset’ for coming years, analysts write

As Tesla Inc. shares slumped to their worst performance on record in the fourth quarter, the electric-vehicle company delivered fewer cars than analysts expected, according to a Monday announcement.

reported 405,278 cars were delivered in the final three months of the year, up 31.3% from the same period a year before, while the company produced 439,701 cars. For the full year, Tesla delivered 1.31 million cars, up about 40% from 2021, while producing roughly 1.37 million.

“All things considered … I’m super proud of the team for this result,” Tesla’s head of investor relations, Martin Viecha, said on Twitter. “A smoother delivery pattern will require more vehicles in transit, which is why production [exceeds] deliveries.”

In depth: Tesla investors await clues on demand, board actions and weigh downside risks in 2023

Analysts on average expected Tesla to deliver 427,000 cars, according to FactSet, and the miss will not reduce whispers about potential issues with demand for Tesla’s electric vehicles. Concerns about demand in China, where Tesla already faces competition from a host of other electric-vehicle manufacturers, are in addition to price cuts that suggest Tesla is now struggling to sell cars after years of backlogged purchase requests as production ramped.

“We believe that many investors underestimate the magnitude of the demand challenges Tesla is facing, and that 2023/24 numbers could materially reset,” Bernstein analyst Toni Sacconaghi wrote in a note Monday. “We also worry about the potential for broader market pressure amid higher rates/slower consumer spending, continuing to impact higher valuation stocks such as TSLA disproportionately.”

Sacconaghi has an underperform rating and $150 price target on the stock, but more bullish analysts also see issues. In an email to MarketWatch, Wedbush analyst Dan Ives — who has an outperform rating and $175 price target on the stock — wrote that “demand cracks [are] clearly happening at Tesla and the [fourth quarter] numbers are not bullish.

More from Ives: A new Twitter CEO, and 9 other things Elon Musk should do to revive Tesla investors’ faith in stock

Analysts currently expect Tesla to increase deliveries to 1.92 million in 2023, as Tesla executives have continued to predict annual 50% increases in deliveries. Tesla only managed to hit or exceed that goal in a single quarter this year, while lapping disappointing year-ago results in the first quarter.

Analysts had been decreasing their profit and delivery estimates for 2023 before these official results were announced. Average predictions fell to 1.92 million and $5.59 a share at the end of the year from 2.12 million and $6.13 a share at the end of the third quarter, according to FactSet.

Tesla’s stock suffered its worst month, quarter and year on record as it headed for the sales result delivered Monday. Tesla shares ultimately declined 65% in 2022, thanks to a 53.6% plunge in the final three months of the year, with the S&P 500 index
declining 19.4% for its worst year since 2008.

See also: Tesla is not alone — 20 (and a half) other big stocks had their worst year on record

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