Tesla (NASDAQ: TSLA) has consistently been a front-runner in the electric vehicle (EV) industry, known for setting ambitious delivery targets and then exceeding them. However, the third quarter of this year has ushered in a sense of uncertainty.
Tesla’s stock, which has seen remarkable growth in recent years, experienced a slight dip of over 1% in Wednesday morning’s trading due to news that even Tesla itself isn’t entirely sure what its third-quarter delivery figures will look like.
In this article, we will explore the factors contributing to this uncertainty and what it means for Tesla and its investors.
Analysts in a State of Puzzlement
The allure of Tesla’s stock has often rested on its ability to outperform its own projections. Investors and analysts have come to expect that Tesla will routinely surpass its delivery targets.
However, the third quarter of this year has presented an unusual challenge. Analysts across the spectrum find themselves grappling with the question of how many Tesla vehicles actually made it to customers’ driveways during this period.
For instance, Tom Narayan at RBC Capital Markets had set his sights on 462,000 deliveries for the third quarter, which would have represented a 1.9% increase over the previous quarter and was closely aligned with consensus expectations.
Narayan’s projections were based on data such as Tesla app downloads and vehicle registration numbers.
Yet, he was far from alone in making these predictions. Analysts had varying opinions, with some expecting Tesla to beat their targets and others anticipating misses. What is clear is that the consensus has become less predictable.
Tesla CEO Elon Musk’s Cautionary Note
Elon Musk, the CEO of Tesla and a charismatic figure in the world of business and technology, issued a warning during the previous earnings call.
He cautioned investors and analysts that the third-quarter delivery numbers might not match the brisk pace they had become accustomed to.
Musk pointed out a key factor contributing to this uncertainty: several Tesla factories were undergoing retooling during the quarter and had been temporarily taken offline for upgrades.
When production decreases, deliveries follow suit. After all, you can’t deliver cars that haven’t been produced. Notably, production numbers from the Texas Gigafactory were reported to be limited during this period.
Analyst Sentiment and Investment Potential
Despite the uncertainties surrounding Tesla’s third-quarter delivery figures, analysts continue to cautiously favor the EV giant. With 11 Buy ratings, 12 Holds, and four Sells, Tesla stock is currently labeled a “Moderate Buy.”
Moreover, the average price target for Tesla stock stands at $272.71, indicating a potential upside of 12.46% for investors. This suggests that analysts still see room for growth in Tesla’s stock value, even amidst the uncertainty of the third quarter.
Tesla’s third-quarter delivery figures have introduced an element of unpredictability into the market, deviating from the company’s typical pattern of surpassing expectations.
Elon Musk’s warning about production challenges underscores the unique circumstances of this quarter. While short-term uncertainty prevails, Tesla’s long-term potential continues to garner cautious optimism among analysts.
Investors should closely monitor developments and carefully assess the risks and opportunities associated with Tesla stock in the coming quarters.
As Tesla navigates its production challenges, the future of its stock remains a topic of intense interest and speculation in the investment world.