What’s Next For Tesla After Mixed Q1 Delivery Report?

TSLA: Tesla logo

Tesla (NASDAQ:TSLA) reported delivery numbers for Q1 2023, indicating that deliveries grew by about 36% year-over-year to 422,875 cars after it slashed prices on its most popular vehicles.  While the company shipped about 412,180 units of the Model 3 and Y vehicle, the Model S and X deliveries stood at about 10,695. However, investors were expecting better, as Tesla stock tumbled by almost 6% in after-hours trading on Monday. For perspective, despite the sizable price cuts (almost 20% on some models), Tesla’s deliveries grew by under 5% versus the December quarter. Moreover, year-over-year growth rates were also well below the 50% long-term compounded growth rates that the company is targeting. At this rate, Tesla’s run-rate growth also falls short of the optimistic two million delivery target for 2023. There are also concerns that Tesla’s inventory is building up as the company has produced more vehicles than it is delivering over the last four quarters.

So what should investors expect from Tesla’s Q1 2023 results, due later this month? While higher volumes should benefit revenue growth, Tesla’s margins are likely to have faced meaningful pressure over the quarter. For perspective, automotive gross margins stood at nearly 33% in Q1 2022, and the number could likely fall below 25% in Q1 2023. That said, Tesla could offset some of the impacts of the price cuts, via better economies of scale and easing supply chain issues.

We remain marginally positive on Tesla stock despite the mixed delivery numbers. There are a couple of factors that could help Tesla in the near term. Firstly, Tesla is likely to bolster its aging model lineup. The Cybertruck pickup truck is likely to go into production this year, while deliveries of the semi-truck recently started. At the current market price of $195 per share, Tesla trades at just over 34x consensus 2024 earnings, which we believe is reasonable versus historical levels. We continue to believe that Tesla will remain a big beneficiary of the long-term transition to electric vehicles given its well-oiled supply chain, superior electric drivetrains, and its lead with software and self-driving technology. We value Tesla stock at $221 per share, which is about 13% ahead of the current market price. See our analysis on Tesla ValuationIs TSLA Stock Expensive Or Cheap? for more details on Tesla’s valuation and how it compares with peers. For more information on Tesla’s business model and revenue trends, check out our dashboard on Tesla RevenueHow TSLA Makes Money.

Relevant Articles
  1. Tesla Semi Is On Track For A 2026 Launch. Will It Help Tesla’s Underperforming Stock?
  2. How Will Tesla’s Earnings Trend After A Tough Q1 Delivery Report?
  3. With Deliveries Falling And Inventory Piling Up, What’s Next For Tesla Stock?
  4. Down Almost 20% This Year, Is Tesla Stock Good Value?
  5. Down 9% Year-To Date, Will A Q4 Earnings Beat Drive Tesla Stock Higher?
  6. With Delivery Growth Cooling, Is Tesla Stock Still A Buy At $250?

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Apr 2023
MTD [1]
YTD [1]
Total [2]
 TSLA Return -6% 58% 1267%
 S&P 500 Return 0% 7% 84%
 Trefis Multi-Strategy Portfolio 0% 8% 239%

[1] Month-to-date and year-to-date as of 4/4/2023
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates