Electric vehicle leader
Tesla
is due to report third-quarter unit sales Monday. Investors should brace for a little bit of chaos.
Wall Street estimates are all over the place. A few weeks ago analysts were projecting 473,000 units, according to
FactSet.
Now that number is 461,000. The company-compiled consensus estimate is about 455,000 units. That includes estimates from 25 large brokers.
Most of the time,
Tesla
estimates come down a little at the end of any quarter, typically by 1% to 2%. This quarter’s estimates are off closer to 3% from early-quarter projections. What’s more, the range of estimates is wider than normal. The lowest estimate on FactSet is 438,000 units. The highest is 511,000. The 73,000 unit difference is about twice as wide as it was for the second quarter.
Eliminating the top and bottom numbers, like old figure skating judging, the range looks to be about 440,000 units to 485,000 units. Tesla delivered about 466,000 vehicles in the second quarter.
Tesla’s third-quarter results will either be down a little, flat, or up a little compared with the second quarter. The reason for no, or low growth, according to many analysts is planned plant downtime taken to upgrade facilities. Tesla is about to deliver a refreshed Model 3 in Europe and China.
Still, investors won’t like a low number. It will raise questions about EV demand amid rising interest rates and more EV competition. Investors will also pay attention to production. In the second quarter, Tesla produced almost 480,000 units, almost 14,000 more than it delivered. Investors don’t want to see inventory building. They will want to see production and sales more closely mirror one another.
With all the estimate changes, calling the stock price reaction this quarter won’t be easy. When delivery numbers beat the Street, Tesla stock typically goes up between the delivery report and the earnings report about two-thirds of the time. It isn’t hard to understand why. Better deliveries mean rising earnings estimates.
It happened after second-quarter deliveries. Tesla stock was $261.77 just before second-quarter numbers were reported. Shares closed at $291.26 just before third-quarter numbers were reported, up about 11%.
Tesla stock, however, is down about 14% since earnings were reported. The market deserves some of the blame for the drop. The
S&P 500
and
Nasdaq Composite
are down about 6% and 8%, respectively, over that span.
There is always a lot going on with Tesla stock. A quarterly delivery figure is just one of the things that matter to investors. The delivery number can generate a lot of trading volatility, though. Some volatility is likely on Monday.
Write to Al Root at [email protected]
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