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Tesla delivered 435,059 units in the third quarter, below estimates.
Justin Sullivan/Getty Images
Electric vehicle leader Tesla delivered significantly fewer cars than Wall Street expected, but shares still rose after a decline in premarket trading.
Investors were bracing for a little chaos, but not such a bad outcome.
In the third quarter, Tesla (ticker: TSLA) delivered 435,059 cars, while Wall Street expected closer to 455,000 cars – a consensus figure the company came up with based on forecasts from 25 major brokerages. Before the result, the numbers were mixed up. A few weeks ago, analysts were forecasting 473,000 units, while on Sunday that number was 461,000, according to FactSet.
Production was partly to blame. The company produced 430,488 units.
Tesla shares fell 3.8% to $240.62 in premarket trading, but recovered by midday Monday with a gain of 0.4% to $251.30. The S&P 500 lost 0.3%, while the Nasdaq Composite gained 0.4%.
The fact that investors were expecting a weak result is one reason for the market’s relatively neutral reaction.
Most of the time, Tesla’s estimates fall slightly at the end of a quarter, typically by 1% to 2%. The range of estimates for the third quarter was approximately twice as large as for the second quarter.
Still, Tesla’s delivery numbers missed the low end of FactSet estimates and were worse than the Street had imagined. Deliveries fell about 7% compared to a record 466,140 vehicles delivered in the second quarter.
According to many analysts, an important reason for the decline is the planned factory closures to modernize the Tesla factories. The company is about to deliver a redesigned Model 3 in Europe and China.
This was at least partially reflected in the inventory before the delivery figures were announced. The stock was down about 14% at the start of Monday’s trading as management spoke of shutdowns at its factories in the third quarter when it announced its latest earnings. The S&P 500 and Nasdaq are down about 6% and 8%, respectively, over this period.
Production did not come close to meeting delivery estimates. Tesla produced around 430,000 vehicles, around 49,000 fewer than in the second quarter (479,700).
One bright spot is that sales exceeded production. This means that inventories have shrunk for the first time since the first quarter of 2022.
Another positive factor is that management is sticking to its forecast of delivering around 1.8 million vehicles for the entire year 2023. This leaves around 475,000 vehicles to be delivered in the fourth quarter, while Wall Street expects 490,000 vehicles.
If delivery numbers are better than expected, Tesla stock will rise about two-thirds of the time between that announcement and the earnings report. It’s not hard to see why. Better deliveries mean rising earnings estimates.
Third-quarter deliveries weren’t anywhere near “better,” but Tesla’s deliveries also fell short of forecasts for the final three months of 2022. Shares fell 12% on January 3, the first day of trading after the figures were released.
There’s always a lot going on with Tesla stock. A quarterly delivery number is one of the things that is important to investors and the delivery number can cause a lot of trading volatility. The recovery on Monday morning illustrates how the stock can move.
Write to Al Root at [email protected]