Tesla Stock Dips as Company Misses Earnings Estimates and Reveals Cybertruck Delivery Date

Tesla stock (TSLA) saw a nearly 8% drop in early trading on Thursday after the company reported lower-than-expected earnings for the third quarter. Despite missing estimates, Tesla did reveal that Cybertruck deliveries are on track for November 30 of this year.

In terms of revenue, Tesla reported $23.4 billion for Q3, slightly below analysts’ estimates of $24.06 billion; however, revenue still increased by 13% compared to the same period last year. On the profitability front, Tesla reported adjusted earnings per share (EPS) of $0.66, missing the expected $0.74, and adjusted net income of $2.3 billion, lower than the expected $2.56 billion. The decline in profitability could be attributed to anticipated downward pressure on margins as Tesla implemented cost-cutting measures in late 2020. The company reported a Q3 gross margin of 17.9%, slightly below Wall Street’s estimate of 18.0%.

Wedbush analyst Dan Ives expressed concerns about Tesla’s performance, stating that the stock could be affected in the near term due to the company’s hesitation to commit to the end of price cuts. As a result, Wedbush lowered its Tesla price target to $310 from $350 following the release of Q3 earnings.

Despite the disappointing earnings, Tesla revealed that Cybertruck deliveries are still expected to begin on November 30. During the conference call, CEO Elon Musk stated that it would take between one and a half to two years for the Cybertruck to become cash-flow positive. Musk also shared his vision of achieving a production run rate of 250,000 Cybertruck units per year by 2025, but he acknowledged that the company would face significant challenges in reaching this goal.

Goldman Sachs analyst Mark Delaney also expressed concerns about the current macroeconomic environment and higher interest rates, which may hinder Tesla’s growth. Following the Q3 report, Delaney lowered his Tesla price target to $235 from $265.

However, Tesla remains committed to its 2023 production goal of 1.8 million vehicles. The company recently announced that it delivered a total of 435,059 vehicles globally, with over 419,000 being Model Y and Model 3 vehicles. The deliveries fell short of Wall Street estimates of 456,722. To achieve its annual delivery goal, Tesla will need a strong quarter with around 500,000 deliveries.

Looking ahead, Tesla expects Model Y production to gradually increase at its Giga Austin and Giga Berlin factories. Musk also hinted at plans to build a factory in Mexico but mentioned the need to assess global economic conditions first.

CFRA analyst Garrett Nelson took a more positive stance on Tesla’s prospects, noting that even though the company missed earnings, it reiterated its 2023 volume guidance of 1.8 million units. Nelson also emphasized that Tesla’s annual installed Cybertruck production capacity now exceeds 125,000 units, which should reassure investors about the highly-anticipated new model. Nelson maintained his Buy rating for Tesla, but adjusted his price target to $300 per share.

While concerns about gross margin pressures were raised, Nelson believes that Tesla’s profitability will improve in the coming quarters due to favorable comparisons. He also noted that the ongoing United Auto Workers strike will solidify Tesla’s position as a winner in the electric vehicle race, further widening its competitive advantage.

In summary, Tesla’s stock took a hit as the company fell short of earnings estimates. Although concerns about profitability and production challenges linger, Tesla remains determined to achieve its ambitious production targets and fulfill its promise of delivering the Cybertruck by the end of November.

Note: The article featured excerpts and analysis from various analysts, including Dan Ives from Wedbush, Mark Delaney from Goldman Sachs, and Garrett Nelson from CFRA.