Why Is Tesla (TSLA) Stock Down Today?
Tesla's (NASDAQ:TSLA) stock is down this morning on some disappointing delivery news. The electric vehicle (EV) leader enjoyed some momentum last week as it prepared for AI Day 2022. But after the company revealed its delivery and production statistics for the year’s third earnings quarter, shares were quick to fall. TSLA stock dipped by almost 8.5% within the first hour of trading today. Since then, it has slightly rebounded but remains firmly in the red. As of this writing, it is down more than 8% for the day. While the stock’s current trajectory indicates that it may move higher, it will be hard to overcome the negative momentum caused by the delivery report right away.
If Tesla is executing well, why is $TSLA down 40% YTD? Why is it down today on a day when the rest of the market is up? Face it, smart investors knew when to bail out and many did late last year, while some unethical pumpers kept pumping the stock so they could dump it.
— Facts Chaser 🌎 🐶 🤦🏻♂️ (@Factschaser) October 3, 2022
It’s been a complicated quarter for TSLA stock. Shares have rebounded since they plunged in June 2022 but still haven’t gotten back to where they were earlier in the year. Even the successful enacting of a stock split hasn’t helped the company gain any serious momentum. That’s been mostly due to volatile market conditions but Tesla’s recent production and delivery report raises some questions about the company’s future. It started the year on a high note but will it end it on a low one?
Let’s take a closer look at what investors can expect as Tesla prepares for the year’s final quarter.
TSLA Stock After Deliveries
Most experts weren’t expecting a groundbreaking quarter from Tesla where deliveries are concerned. Nonetheless, the EV leader failed to meet the moderate expectations set by Wall Street. According to StreetAccount, a subsidiary of FactSet, it reported a total of 343,000 deliveries, down from the predicted 364,660. This falls short of forecasts from experts such as Wedbush’s Dan Ives and New Street’s Pierre Ferragu who reduced his delivery target due to anticipated problems from the Shanghai gigafactory.
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Things were slightly better on the production front. Tesla reported 365,000 EVs produced, an increase from the previous quarter for which it reported 258,580. However, as CNBC reports, “deliveries are the closest approximation of sales reported by Tesla.” And given how TSLA stock has responded to the news, it’s clear that investors are worried.
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Wall Street analysts are divided in their predictions for TSLA stock in the final quarter. JP Morgan analyst Ryan Brickman reiterated a “sell” rating and set a bearish price target, citing the “potential for multiple compression” and rising competition. And while Vikram Bagri of Needham maintains his “hold” rating, others have expressed more positive sentiments. Mark Delaney of Goldman Sachs recently stated that his team believes the company is “well positioned to drive solid volumes and also margins/FCF going forward.” Cowen’s Jeffrey Osborne stated the following after issuing a market perform rating:
Naysayers on the Tesla story will point to the shortfall in 3Q as a demand issue. We could be seeing the early signs of a demand issue but monthly registrations and 4Q results will need to be monitored to better assess the situation.
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The Bottom Line
It will indeed be hard to assess the true health of TSLA stock without accounting for vehicle registration statistics. While the quarter’s delivery statistics are disappointing, they don’t mean that the company can’t recover in the coming months. Registrations have been rising in China recently, although some experts have expressed demand concerns. But if registrations continue to rise on a global scale, deliveries will likely rebound in the months ahead.
On the date of publication, Samuel O'Brien did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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Samuel O'Brien has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy, and NFTs. O'Brien loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.
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