Tesla’s Q2 deliveries were widely considered a disappointment on Wall Street, but then suddenly on Friday, the company released an addendum to that initial report. It updated that initial delivery report by saying that in addition to the more than 22,000 vehicles it had delivered during the second quarter, there were an additional 3,500 vehicles in transit to their buyers.
Wall Street consensus for Tesla’s Q2 deliveries stood at a little over 24,000 before the company released its report on Monday.
Missing cars in Tesla’s Q2 deliveries report?
Perhaps Tesla management caught a glimpse of the report from KeyBanc Capital Markets with the headline: “TSLA – ALERT: Where Did All Those Extra Cars Go?” It was an apt question illustrating that the general consensus on Wall Street regarding Tesla’s Q2 deliveries was that the report left analysts with more questions than answers about what was going on down in Freemont.
Interestingly, KeyBank’s report even questioned why Tesla’s Q2 deliveries report didn’t include the number of vehicles that were in transit at the end of the second quarter. Analyst Brad Erickson suggested that reporting the number in transit “could have at least partially explained the offset (if it was a headwind; we’d suspect it wasn’t).”
Before calling attention to that, he had another good point. He noted that Tesla had said that both “production and demand rebounded” to record highs last month following a production shortfall experienced earlier in the quarter. He also explained that he and his team “struggle to understand how orders would have rebounded in lock-stop with a production issue that was not known publicly.”
More questions about Tesla’s Q2 deliveries
Bernstein analyst Toni Sacconaghi, Jr. also called attention to the lack of an in-transit number in Tesla’s initial report on Monday, and the company said Friday that it felt compelled to provide the number because it received so many questions about it. Sacconaghi also thought it strange that Tesla’s Q2 deliveries report was released after closing bell the night before a holiday. Further, he questioned why, during the May earnings call, management failed to mention the production problems they claimed caused the second quarter delivery disappointment. Tesla had said a shortfall of 100kWh battery packs was to blame.
Goldman Sachs analyst David Tamberrino went so far as to cut his price target for Tesla by $10 to $180 per share based on the delivery miss. He took Tesla’s Q2 deliveries report as an indication that demand for the Model S and Model X looked to be plateauing just under an annual run rate of 100,000.
Tesla’s Q2 deliveries were “good enough” for some
Despite all the questions bears raised about Tesla’s Q2 deliveries, one or two analysts, including Baird’s Ben Kallo, found the result to be satisfactory. He described it as “good enough” even before Friday’s update, even though it was a wide miss from his own projection of 25,000. He noted that at 22,000, the company managed to just barely meet the bottom of its previously provided range for first-half delivery guidance. Tesla had guided for 47,000 to 50,000 deliveries during the first six months of this year.
Tesla expects to deliver more Model S and Model X vehicles in the second half of the year if global economic conditions didn’t prevent this. It’s an interesting caveat that came along with a delivery report that simply brought a lot of questions. However, as most analysts noted, investors are mostly focused on the Model 3, although despite that, they still send Tesla shares tumbling earlier in the week due to the delivery miss.
Tesla shares closed up 1.42% at $313.22 on Friday.
