Tesla typically releases its quarterly delivery numbers within a few days of each quarter’s end, so as the end of the third quarter approaches, analysts are digging in. The automaker disappointed again with its second quarter delivery number, but it is still promising a big year for deliveries. Without a strong third quarter number, Wall Street will no longer see any chance of Tesla meeting even the revised lower delivery number. The automaker said it would deliver 50,000 vehicles in the second half of this year.

Meanwhile the merger with SolarCity nears its shareholder vote, and short-sellers are being forced to cut their positions as Tesla investors recall their shares so they can vote on it.

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Tesla’s Q3 deliveries will be “solid”

Pacific Crest analyst Brad Erickson expects Tesla’s third quarter deliveries to be around 22,000, representing a 90% year over year growth rate. He ran checks with 20 Tesla stores around the U.S., and based on those checks, he thinks Model X deliveries might beat his estimate of 9,000. He expects Model S deliveries to be in line with or slightly below his estimate of 13,000.

What concerns him right now is whether the company is seeing demand for the Model S decline. He believes Tesla is tracking toward the low end of its delivery outlook of 80,000 to 90,000 for this year. However, he thinks it is utilizing “various discounting mechanisms” in order to make that target, which he says is worrying.

In his checks, he found that the least expensive 60 kWh Model S is gaining traction over the 75 kWh model, which he says dilutes Tesla’s gross margin by about 1,000 basis points. Additionally, he estimates that up to one-third of current Model S orders are coming from consumers who preordered a Model 3 and are now opting the newly created two-year lease, which is also less expensive. The analyst also found that the automaker appears to be using a deeper discounting formula in order to push sales of inventory cars. All these offers expire on Friday, which is the last day of the third quarter.

About that Tesla – SolarCity merger…

Erickson is still cautious on Tesla. Although he does expect the merger with SolarCity to close, he believes the car business, which he estimates will account for more than 90% of revenue if it does close, faces many challenges. His biggest concern is bridging demand through the Model 3, which is expected to be released late next year.

The merger between the two unprofitable companies continues to be a hot topic, and investors who did have shares of Tesla out on loan are calling those shares back in, according to The Wall Street Journal. The automaker’s stock declined on Tuesday following a more than 6% increase between September 14 and Monday, and analysts attributed the shift partially to “the easing of an unusual short squeeze,” the media outlet reports.

The short squeeze started earlier this month when brokers started recalling the shares they had loaned to short-sellers because they need to actually have those shares in hand on the record date in order to be eligible to vote on the controversial merger. Some short-sellers have been forced to cut their shorts because brokers are recalling the shares they have borrowed.

Analysts suggest that short sales of Tesla shares might rise again after the record date for eligibility to vote on the merger has passed. Although no exact official record date has been given, Tesla’s disclosures point to a date possibly sometime next week.

On Wednesday, Tesla shares edged upward by as much as 0.18% to $206.18.

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