Electric vehicle pioneer Tesla is set to release its third-quarter unit sales figures on Monday, and investors should prepare themselves for a potentially turbulent report.
Wall Street estimates have been all over the map. Just a few weeks ago, analysts were predicting 473,000 units, but that number has now been revised down to 461,000, according to FactSet. The company-compiled consensus estimate hovers around 455,000 units, taking into account forecasts from 25 major brokerage firms.
Normally, Tesla’s estimates experience a slight dip towards the end of each quarter, typically ranging from 1% to 2%. However, this quarter’s projections have seen a larger decline of about 3% compared to early-quarter expectations. What’s more concerning is the wider range of estimates than usual. On FactSet, the lowest estimate stands at 438,000 units, while the highest sits at 511,000. This 73,000 unit difference is approximately double the range observed in the second quarter.
By eliminating the extreme figures akin to the judging in figure skating competitions, the projected range appears to be between 440,000 and 485,000 units. In the previous quarter, Tesla managed to deliver approximately 466,000 vehicles.
When it comes to Tesla’s third-quarter results, analysts anticipate either a marginal decline, no significant change, or slight growth compared to the previous quarter. The primary reason for this projected lack of growth, according to many experts, is the planned plant downtime taken to upgrade facilities. Tesla is on the brink of introducing an updated version of its Model 3 in Europe and China.
Tesla Delivery Numbers and Investor Concerns
Investors always scrutinize Tesla’s delivery numbers, as they provide key insights into electric vehicle (EV) demand and competition. However, a low delivery number could raise questions about the future of EV demand, especially in light of increasing interest rates and intensified EV competition.
In the second quarter, Tesla produced an impressive total of almost 480,000 units, exceeding deliveries by nearly 14,000 units. While this excess production is concerning to investors who do not want to see inventory building up, they would prefer production and sales figures to closely align with each other.
Estimating the stock price reaction this quarter is no easy task due to changing estimates. Typically, when Tesla’s delivery numbers exceed expectations, there is a positive impact on the stock price between the delivery report and the earnings report in about two-thirds of cases. It makes sense as better delivery figures often result in higher earnings estimates.
This was evident after the second-quarter deliveries when Tesla’s stock price increased from $261.77 before the report to $291.26 just before the third-quarter numbers were released, representing an 11% increase. However, since the earnings report, Tesla’s stock has seen a decline of approximately 14%. The broader market downturn also plays a role, with the S&P 500 and Nasdaq Composite down about 6% and 8% respectively during the same period.
While the quarterly delivery figure is important, there are numerous other factors that influence Tesla’s stock performance. Nevertheless, the delivery number itself can generate significant trading volatility, which is expected on Monday.