Tesla’s (NASDAQ:TSLA) honeymoon with Wall Street hit a bump on Monday, after the EV leader reported its Q1 vehicle deliveries. As of this writing, Tesla shares are down 6%. Nevertheless, the shares are still impressively up by 58% year-to-date.
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Do the Q1 delivery figures justify a sell-off of Tesla stock? The answer is likely no. Although margins remain a concern.
Tesla notched total deliveries of 422,875 compared to the Street’s 421,500 estimate. Model 3/Y deliveries accounted for 412,000 of the total while Model S/X units reached 10,700.
The total represents a 36% increase compared to the same period last year and a 4% sequential uptick. Total production for the quarter came in at 440,800, which considering the supply constrained end to 2022, Wedbush analyst Daniel Ives believes “speaks to improved production and capacity for Tesla globally.” Ives also points out that in the face of an uncertain macro, the early year Model Y/3 price cuts have obviously paid “major dividends,” with demand appearing to now be robust.
The big question remains whether margins have been severely impacted by the cuts. Ives thinks the major threshold over the coming quarters is for Auto GMs to stay above 20%.
“Overall,” the 5-star analyst summed up, “while we will get more details on April 19th when Tesla reports its 1Q results and guidance, this delivery number was a clear step in the right direction and is a positive for the bulls digesting these deliveries.”
All told, Ives rates TSLA shares an Outperform (i.e. Buy), while his $225 price target implies shares will rise 15.5% over the coming months. (To watch Ives’ track record, click here)
On the other hand, Oppenheimer analyst Colin Rusch’s take is more nuanced. He believes the fact Model S/X deliveries came in well below expectations raises the question around demand for these models although that is somewhat countered by the bullish signal sent by the strong Model 3/Y deliveries.
Rusch also thinks the key issue will be margins but remains ambivalent regarding Tesla’s prospects.
“We view vehicle sell-through as positive in sum, but continue to have reservations about mix and margins meeting expectations in 1H23 despite TSLA’s clear cost advantage vs. Peers,” said the 5-star analyst.
Accordingly, Rusch remains on the sidelines with a Perform (i.e. Neutral) rating and no fixed price target in mind. (To watch Rusch’s track record, click here)
And what about the rest of the Street? Based on a total of 20 Buys, 10 Holds and 3 Sells, the analyst consensus currently rates this stock a Moderate Buy. The average target clocks in at $215.43, suggesting the shares will post modest growth of 4% in the year ahead. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
