Tesla to Demonstrate 30% Annual Delivery Increase This Quarter – Wedbush

Mar 31, 2020
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As global populations observe mandatory lockdowns following the outbreak of COVID-19, consumer purchasing priorities have shifted as industrial shutdowns from the virus reduce market demand and depress purchasing powers. As a result, big and small businesses have been forced to take a hit to their top and bottom line income statement metrics.

In a fresh note issued to investors yesterday, Wedbush analyst Dan Ives has tried to estimate vehicle deliveries for automotive and alternate energy products manufacturer Tesla Inc (NASDAQ:TSLA). The company has witnessed dropping vehicle registrations in Europe, and Ives believes that analyst consensus estimates for Tesla's vehicle deliveries in the first three months of this year are 'artificially high' as reported by SeekingAlpha.

Tesla (NASDAQ: TSLA) Shares Have a Further Upside Bullish Potential of 64 Percent to $1,350, According to Wedbush Securities

Tesla's Vehicle Delivery Projections for First Quarter Following Coronavirus Outbreak Show Year Over Year Growth and Sequential Decline

During its first quarter of 2019, Tesla delivered 63,000 vehicles all over the globe and manufactured roughly 1.2x of that amount. Its Model 3 led in the share of total deliveries, with roughly 51,000 Model 3s and 12,000 Model S/Xs making their way to customers. The figures represented 110% growth over Q1 2018 and a 31% sequential drop.

Keeping these numbers in mind, Wedbush securities' prediction for the company's performance during the first three-quarters of 2020 paint a similar picture as Tesla's results from the same quarter last year did at the time. Analyst Ives believes that the company is slated to deliver 82,000 cars in Q1 2020, with the Model 3 once again taking the lion's share through 68,000 deliveries.

However, as is also stated in the investor note, Wedbush's estimates are far below analyst consensus. Analysts expect that Tesla will deliver 97,000 vehicles Q1 2019, and in the process, mark a roughly 30% growth year-over-year despite the coronavirus wreaking havoc on global supply chains, medical systems, stock markets and populations.

Q1 2020 (est) Q1 2019 Q4 2019 Q4 2018
Model 3: 68,000 50,900 92,550 63,150
Model S + X: 14,000 12,100 19,450 27,550
Total: 82,000 63,000 112,000 90,700

Wedbush's figures mark for a 27% sequential drop and a 30% annual increase in Tesla's vehicle deliveries

Looking at Tesla's vehicle deliveries during 2019's fourth quarter, we see that the Coronavirus' impact combined with seasonal shipment glut generally faced by the company during the first month of a quarter might hit it hard during Q1 2020. Should Ives' figures turn out accurate, then the automaker will effectively witness a 27% sequential drop in sales.

In percentage terms, a 27% drop is still better than the 30% sequential drop in deliveries witnessed by Tesla during its first quarter of 2019.

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Ives believes that the analyst consensus highlighted above is inflated due to firms including investment banks and brokerages yet to factor in the coronavirus's impact on the global economy. Today's investor note comes days before Tesla generally issues its report for the year's first-quarter deliveries.

The outbreak of the coronavirus has hurt auto manufacturers globally on the stock markets as many have seen their market capitalizations shrink by as much as 30% within weeks. Tesla Inc, in particular, has been hit hard after its share price ballooned past $900 in February and then tanked to levels nearing $400/share following a global sell-off.

Wedbush also notes that due to Tesla suspending its operations in the Fremont, California Gigafactory, it will be unable to meet cross the 500,000 mark for vehicles shipped to customers in 2020. This is not a new claim and merely reiterates earlier statements made by the market research firm.

Finally, today's research note also states that over the long term, Tesla has the potential to generate earnings power worth $20/share. This metric evaluates the worth of a company's total assets in generating pre-tax-and-interest earnings. Tesla earnings power estimate (BEP ratio) as of December 2019 and calculated by Gurufocus is -$205, leading Volkswagen and lagging behind other automakers.

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