Wall Street Grows Worried On Tesla’s Missing Delivery Estimates

Tesla delivered 405,278 vehicles in the fourth quarter of 2022. It is a record result for a quarter, but Wall Street was looking for closer to 420,000 electric vehicles.

Fourth quarter deliveries have been disappointing, and Tesla’s shares are dropping while Wall Street analysts are closely watching price targets. Wall Street grows worried about not only electric-vehicle demand, but about profit margins as well.

Traders are seeing the decline in the stock, but seem unable to understand why it is happening. TSLA has ended a grand degree super cycle. When an instrument ends a larger degree super cycle the pullback usually gets extensive and deep from the lowest lows. At the time of writing, Tesla’s shares are trading at $107.46 after they had dropped 14% in mid-day trading to $106 versus last year’s high at $402.67.

Markets move within cycles and nothing moves in one direction without a pullback. As investors and traders have to take profits. Tesla announced a final quarter increase during which vehicle sales grew at a staggering 87%, helping launch the company’s shares higher.

Elon Musk’s Tesla shuffled into the new year with Q4 sales growth that is worse than expected. It was not just that the 405,000 cars Tesla handed over to customers during the final three months of last year fell short of the 420,000 consensus Wall Street estimate, the miss was flat as well.

The reaction was immediate: an already battered and beaten share price shed more than 10% of its value to lows last seen in August 2020. Over the past 52 weeks, the stock has diminished by 74%, losing more in market cap than the next 10 largest carmakers are currently worth together.

Tesla’s quarterly delivery figures offered the first hard proof the carmaker has a demand problem. Previously, all evidence suggested its growth was constrained by the number of cars it could produce. This was a huge miss for Tesla. So many bulls are celebrating it.

One important question, traders have now, is how Tesla can achieve the 2 million vehicle deliveries Wall Street has been anticipating for 2023. While Musk has said the company would enter the new year with the capacity to produce the necessary 40,000 cars per week, it is not obvious how he could find enough buyers at a time when an entire third of the world population may fall in recession.

Tesla’s competition from other manufacturers is also heating up with a crowd of new battery-powered SUVs, sedans and sports cars. Some vehicles like the Rivian R1T pickup truck have not only beaten Musk to market in their respective segments, they have won accolades as well.

Normally Tesla stock would be rebounding after the decisive defeat it endured in December, when it lost nearly half its value. It is widely speculated many US retail investors used the opportunity to harvest tax-deductible losses to offset capital gains elsewhere in their portfolios before the year ended.

Perhaps in response to growing concerns Musk is too distracted, news leaked to Reuters that the Tesla’s Tom Zhu, would now lead all vehicle assembly and distribution in North America. Either way, Tesla has a lot of work to do to regain the confidence of investors and prop up the company’s sagging stock price.