The Tesla Inc (NASDAQ:TSLA) 4Q 17 deliveries report is expected within the next day or two, and the heat is on. Not only does the automaker have to perform on a total delivery basis, but investors are also anxiously waiting to see how many Model 3 cars were delivered during the fourth quarter. There have been reports pointing in opposite directions on Model 3 production in recent weeks, so it seems no one really knows what to expect from that Tesla 4Q 17 deliveries report.
The fact that estimates are all over the place certainly support that.
Cowen slashes estimates for Tesla 4Q 17 deliveries
The EV maker delivered 26,150 vehicles during the third quarter, of which 220 were Model 3 cars. The FactSet consensus for total Tesla 4Q 17 deliveries stands at about 30,000, including 4,100 Model 3 sedans, but the estimates diverge from there. In order to crack 100,000 deliveries for all of 2017, the automaker must have delivered a little over 27,000 vehicles.
For example, Evercore ISI analysts are looking for Tesla 4Q 17 deliveries to total 31,500, of which they expect 5,800 to be the Model 3. Oddly enough, they left their Model 3 estimate that high even though they feel that the number is “more likely in the 3 to 4k range.”
In last year’s fourth quarter, the automaker delivered 22,000 vehicles, missing the consensus of around 25,000. In the third quarter, Tesla delivered 25,915 Model S and Model X vehicles, and management said the stage had been set for a record number in the fourth quarter.
Most analysts consider the Model 3 to be the most important number in the Tesla 4Q 17 delivery report because the company has been having such a hard time ramping production.
How many Model 3 cars?
KeyBanc analysts slashed their Model 3 delivery estimate to approximately 1,000 for the fourth quarter, a dramatic cut for them because they were estimating 10,000 Model 3 cars before that.
In a note to investors this week, Cowen analyst Jeffrey Osborne became the most recent analyst to slash his Model 3 estimate for the Tesla 4Q 17 deliveries report by 75%. He now expects the automaker to say it delivered 2,250 Model 3 cars during the fourth quarter, while he previously had been predicting 4,000. Osborne also cited a consensus estimate of 4,000 to 5,000 Model 3 deliveries. He estimates that Tesla delivered about 25,250 Model S and Model X vehicles during the fourth quarter.
Tesla originally said it would be producing 5,000 Model 3 cars per week by the end of December, although it later pushed that milestone back to the end of the first quarter. Osbourne added that the precise number of deliveries “isn’t that relevant to the long-term investor’s view of Tesla shares.” He feels that it’s the production run rate that’s more important right now and believes that many of the “kinks” are being worked out of Model 3 production.
Model 3 could be a distraction
Osbourne maintained his bearish view of the automaker, citing cash burn and growing competition in electric vehicles. He warned that the delayed Model 3 production ramp could remain a distraction in the Tesla 4Q 17 deliveries report. He estimates that the automaker burned $1.2 billion in cash during the fourth quarter and believes that it might need to raise capital very soon, possibly before the end of the first quarter or early in the second quarter.
The Cowen analyst maintained his Underperform rating and $170 price target on Tesla stock. The stock slumped by as much as 0.39% to $319.28 in intraday trading on Wednesday.