Tesla Analyst Lowers Q4 Delivery Estimate, Says 2 Dynamics Will Determine EV Stock's Valuation

A Tesla Inc (NASDAQ:TSLA) analyst has lowered the fourth-quarter delivery estimate for the company citing weak demand and survey data, which could see the company miss full-year growth estimates.

The Tesla Analyst: Goldman Sachs analyst Mark Delaney maintained a Neutral rating on Tesla with a $250 price target.

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The Analyst Takeaways: Data on Tesla deliveries for key regions like the United States, Europe and China could point to mixed demand for the current fourth quarter, Delaney said in a new investor note.

"Tesla is not currently tracking to meet its objective to grow vehicle deliveries in 2024," Delaney said.

The analyst said Tesla needs to report deliveries of around 515,000 or more units in the fourth quarter to achieve delivery growth year over year for 2024.

With the current data showing a miss versus this target, Delaney expects Tesla to "increasingly use incentives" to hit this key number.

Increased incentives like 0% financing, free Supercharging and discounts will negatively impact Tesla's auto gross margins, the analyst added.

Delaney lowers the fourth-quarter delivery estimate from 515,000 to 510,000, which would be up 10% quarter-over-quarter and up 5% year-over-year, but miss the yearly company goal.

The new forecast comes with data showing strength in China, flat results in the United States and weak demand in Europe on a year-over-year basis.

"While we see some fundamental headwinds to the core auto business over the near to medium term, we also believe the stock could remain at a higher multiple to reflect the long-term opportunity tied to FSD/robotics given broader market interest in potential AI beneficiaries."

Tesla's new models planned for 2025 and progress with FSD could "help determine the valuation level the stock will trade at," Delaney added.

Delaney expects Tesla to report fourth-quarter delivery results on or around Jan. 2, 2025.

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Consumer Survey Data: Delaney shares key findings from a HundredX survey of U.S. consumers for Tesla and the electric vehicle sector.

The survey found that Tesla’s brand/trust metric declined in recent months, while the overall sector and peer companies like Ford and General Motors saw trust hold steady over the same time period.

The number of consumers planning to purchase a Tesla vehicle also fell in recent months, while peer companies held steady, according to the survey.

"We believe it will be important to watch how Tesla scores trend going forward, and how products like Full Self Driving (FSD) and new vehicle model (s) affect demand," Delaney said.

TSLA Price Action: Tesla stock trades at $351.39 on Wednesday, versus a 52-week trading range of $138.80 to $361.53. Tesla stock is up 41.5% year-to-date in 2024.

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