Tesla shares fall by 12% after posting delivery reports.

On Tuesday, shares of Tesla tumbled down 12%, a day after the company announced that fourth-quarter production and delivery of vehicles for 2022 fell shy of prediction by analysts and as per the company’s goals.

Tesla disclosed its closest approximation for sales delivery; it stated that the total delivery for the quarter was 405,278 and 1.31 million for the entire year. The whole year’s delivery was up 40% from the previous year.

However, as the estimates compiled by FactSet of most analysts as of December 31, 2022, it was expected that roughly 427,000 deliveries were to be made in the last quarter of the year. Therefore, according to the FactSet and December estimates ranged between 409,000 to 433,000.

Tesla’s CEO Elon Musk had to address his employees in the final days of December that they should not be bothered by the stock market as the price of shares of the company was drastically falling.

Musk addressed the drop in share prices due to rising interest rates; however, as per the critics’ acquisition of $44 billion, Twitter was another reason Musk had to sell off tens of billions of dollars of the company’s shares to finance the takeover of Twitter last year.

As per the experts on Wall Street, Tesla missed out on its delivery due to aggressive discounting by the company in the US and China, creating trouble. However, others believe in a buying opportunity.

As per Toni Sacconaghi, Bernstein, Tesla would face a significant demand problem in 2023.

On Monday, in his notes, he expressed, “Tesla’s annual order run rate in Q4 including significant discounting was only about 1M units, and the company’s target is to sell close to 2M units in 2023. We expect demand challenges persisting in 2023.” Except for the 7-seater version Model Y, costing around $3000, no other Tesla models qualify for any Inflation Reduction Act refund.

He further stated, “We believe Tesla will need to either reduce its growth targets (and run its factories below capacity) or sustain and potentially increase price cuts globally, pressuring margins.”

Delivery reports are considered to be an “incremental negative,” per the Goldman Sachs analyst. But, according to them, Tesla is “well positioned for long-term growth,” reiterating its buying of stocks in a Monday note and further adding that it will be a “key driver of growth,” as in a challenging macroeconomic environment making more affordable vehicles.

“We believe key debates from here will be on whether vehicle deliveries can reaccelerate, margins and Tesla’s brand,” the analysts continued.

Maintaining an outperform rating, Ben Kallo, Baird analyst, declared that he would continue buying Tesla stocks till the company’s earning reports scheduled on January 25 and naming it to be a top pick for 2023

“Q4 deliveries missed consensus but beat our estimates,” he continued in a Tuesday note. “Importantly, production increased ~20% q/q which we expect to continue into 2023 as gigafactories in Berlin and Austin continue to ramp.”

The weakening share price of Tesla shares is a “window of opportunity to buy,” as per the analysts at Morgan Stanley.

“Between a worsening macro backdrop, record high unaffordability, and increasing competition, there are hurdles for all auto companies to overcome in the year ahead,” they said in a note Tuesday. “However, within this backdrop we believe TSLA has the potential to widen its lead in the EV race, as it leverages its cost and scale advantages to further itself from the competition.”

- Published By Team Timeswire

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