TSLA -3 to 172 was the worst performing stock in the S&P500 for Q1, down 29% ..... they report Q1 deliveries tomorrow -
Tesla's Terrible Quarter Catches Some Analysts Asleep at the Wheel -- Heard on the Street -- WSJ
(Dow Jones 03/29 06:00:00)
By Stephen Wilmot
Tesla is having a shocker of a first quarter. The sell-side consensus is
behind the curve, investors much less so.
The electric-vehicle pioneer might not even match the 422,875 deliveries
it made in January through March last year when it reports quarterly volumes
early next week. That would make for the first year-over-year decline in
sales since the pandemic lockdowns of spring 2020 -- not to mention some
tough headlines.
We don't know precisely what numbers the company will report, not least
because it still has a weekend of the quarter left. But we have a fair idea
based on a patchwork of data from third-party trackers.
In the U.S., Tesla delivered roughly 108,000 vehicles in the first two
months of the year, according to estimates by Motor Intelligence, down from
114,000 a year ago. Insurance data tracked by EV website CnEVPost point to a
similar 5% year-over-year decline in China for the first 12 weeks of the
quarter. These are Tesla's two largest markets.
Can the rest of the world save the day? In Europe, sales for January and
February were roughly 46,000, according to the European Automobile
Manufacturers' Association -- up 41% year over year, but a step down from
the sales rate at the end of last year.
This isn't just about weak demand for Tesla, though that does appear to
be a problem despite the brand's aggressive price cuts last year and an
enhanced U.S. subsidy regime this year. Production has also flagged, because
of an update to the Model 3 production line in Fremont, Calif. and an arson
attack in Berlin.
Whatever the reasons, attentive analysts on both sides of the bull-bear
debate have been downgrading their estimates. On Thursday, Deutsche Bank's
Emmanuel Rosner, who rates the stock a "buy," trimmed his delivery forecast
to 414,000. At the other end of the spectrum, longtime bear Gordon Johnson
cut his estimate to 406,500 on Tuesday, when the latest Chinese insurance
data came in.
The analyst consensus given by FactSet has fallen a lot in recent weeks,
but at 457,000 it remains much higher than the latest estimates. That is
likely because the average takes into account many stale estimates from
analysts who aren't looking at the most-recent data.
One hint of where the actual consensus among investors sits -- the number
that might determine whether the stock falls or rises on the report -- comes
from Kalshi, which runs a so-called prediction market that allows bettors to
wager directly on Tesla's delivery numbers and other trading events. As of
Thursday, the consensus indicated by bets on the platform was for sales a
bit below 420,000.
Delivery numbers aren't the only thing Tesla investors focus on, of
course. Right now, the company's automated-driving software is causing a lot
of excitement, though progress is hard to pin down. Still, sales remain the
bedrock of the company's growth prospects, including for software: The more
vehicles Tesla sells, the more potential customers for digital subscriptions
later. That helps explain why the stock is down almost 30% this year.
The big gap between the analyst consensus and what investors actually
expect also implies that official earnings estimates are too high.
Currently, the consensus earnings per share for 2024 is $2.87, which
compares with a share price of $180 to give a forward earnings multiple of
63. But the real multiple of what investors expect is probably a lot higher.
Tesla's stock is even more expensive than it looks.
