A leading analyst has lowered the fourth-quarter delivery estimate for Tesla, citing weak demand and survey data that could see the company miss full-year growth estimates.
The Analyst Takeaways
Goldman Sachs analyst Mark Delaney maintained a Neutral rating on Tesla with a $250 price target. According to Delaney, data on Tesla deliveries for key regions like the United States, Europe, and China could point to mixed demand for the current fourth quarter.
Key Findings:
- Tesla is not currently tracking to meet its objective to grow vehicle deliveries in 2024.
- The company needs to report deliveries of around 515,000 or more units in the fourth quarter to achieve delivery growth year over year for 2024.
- With the current data showing a miss versus this target, Delaney expects Tesla to “increasingly use incentives” to hit this key number.
- Increased incentives like 0% financing, free Supercharging, and discounts will negatively impact Tesla’s auto gross margins.
Fourth-Quarter Delivery Estimate
Delaney lowered the fourth-quarter delivery estimate from 515,000 to 510,000, which would be up 10% quarter-over-quarter and up 5% year-over-year, but miss the yearly company goal. The new forecast comes with data showing strength in China, flat results in the United States, and weak demand in Europe on a year-over-year basis.
Impact on Valuation
Delaney expects the stock to remain at a higher multiple to reflect the long-term opportunity tied to FSD/robotics given broader market interest in potential AI beneficiaries. Tesla’s new models planned for 2025 and progress with FSD could “help determine the valuation level the stock will trade at.”
Survey Data
A HundredX survey of U.S. consumers found that:
- Tesla’s brand/trust metric declined in recent months, while the overall sector and peer companies like Ford and General Motors saw trust hold steady over the same time period.
- The number of consumers planning to purchase a Tesla vehicle also fell in recent months, while peer companies held steady.
TSLA Price Action
Tesla stock trades at $351.39, versus a 52-week trading range of $138.80 to $361.53. Tesla stock is up 41.5% year-to-date in 2024.