Wedbush Lowers Tesla Q2 Delivery Estimate

It’s been a brutal year for Tesla, Inc TSLA, and one analyst said on Wednesday he's lowering expectations for next week’s second-quarter Tesla deliveries numbers.

The Analyst

Wedbush analyst Daniel Ives reiterated his Neutral rating and $230 price target for Tesla.

The Thesis

Ives said it's unlikely Tesla hits its ambitious target of between 90,000 and 100,000 vehicle deliveries in the second quarter. Despite a recently leaked email from Tesla CEO Elon Musk claiming the company was “on track” to report record deliveries in the second quarter, Ives reduced his delivery estimate from 88,000 to 84,000. Tesla’s record for quarterly deliveries is 90,700, set in the fourth quarter of 2018.

Tesla's stock has bounced off of multi-year lows in recent weeks after the company implemented a series of cost-cutting measures, but Ives said investors shouldn’t underappreciate the importance of the latest delivery numbers.

“In order to get back on the yellow brick road to profitability in 2H19/FY20, Tesla needs to catalyze demand in the US and see Europe Model 3 success over the coming quarters, coupled by cost cutting initiatives, with next week's delivery numbers announcement (likely next week) an important potential first step on this road to recovery,” Ives wrote in a note.

Looking ahead, Ives said the Tesla story is all about vehicle demand. The company has guided for between 360,000 and 400,000 units in vehicle demand for 2019, but Ives said at least 275,000 Model 3 deliveries in 2019 should be considered a success at this point.

Price Action

Tesla shares traded higher by 2.2% to $224.68 at time of publication, but remain down 32% in the past year.

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