Tesla stock was dropping after disappointing China delivery numbers.
Sunday, the Chinese Passenger Car Association announced that Tesla (ticker: TSLA) delivered 74,073 units in September from its plant in Shanghai, down from about 84,000 delivered in August, and down from about 83,000 delivered in September 2022.
That number includes cars exported from China, mainly to Europe, as well as domestic sales. How many cars Tesla exports varies from month to month based on how it decides to meet regional demand and production from its plant in Germany.
The CPCA number is, essentially, a monthly production update for Shanghai. Falling production isn’t what investors want to see, but Tesla recently updated and refreshed its Model three sedan in Europe and China. An updated version of the Model three is expected in the U.S. later this year.
Tesla didn’t respond to a request for comment about Model three timing in the U.S.
Having an upgraded car coming has put pressure on older Model three sales. Citi analyst Jeff Chung tracks insurance registration data. He found that Tesla sold about 240 Model three sedans in China from Sept. 11 to Sept. 17, while the typical figure is between 2,000 and 3,000 a week.
The model changeover and planned factory downtime are two reasons Tesla delivered only about 435,000 units in the third quarter. Wall Street had been looking for about 455,000 units.
Investors haven’t punished Tesla stock, though. Since the start of September, Tesla stock is up about 1%, while the
S&P 500
is down about 4%. Investors are buying the reasons for the delivery dip and are hoping trends reverse in October through the rest of the year.
Wall Street expects Tesla will deliver 485,000 units in the fourth quarter, pushing the year to date total above 1.8 million units, up about 40% year over year.
Tesla stock was weak on Monday morning. Shares were down 1.5% in premarket trading while S&P 500 and
Nasdaq Composite
futures were 0.7% and 0.8%, respectively.
Along with delivery news, Wells Fargo analyst Colin Langan cut his Tesla price target by $5 to $260. He rates shares at Hold.
“Is the pain worth the gain?” asked Langan in his report. He just isn’t sure if it’s a good idea to wait to see how the fourth quarter turns out. He sees lowered prices driving fourth-quarter volume, and thinner profit margins from reduced prices.
That’s a bearish take, but the average analyst price target for Tesla stock according to FactSet is about $255, just below where the stock is trading. It isn’t unusual, however, for Tesla stock to trade above the average analyst target price.
Overall, about 42% of analysts covering Tesla stock rate share Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.
Write to Al Root at [email protected]
Read the full article here
