Tesla Analyst: September Rally In Deliveries Could Help Automaker Meet Street Expectations

After Nio Inc – ADR NIO's disappointing quarterly results, the spotlight now shifts to Tesla Inc TSLA, which is scheduled to report third-quarter deliveries next week.

The Analyst

Credit Suisse analyst Dan Levy maintained an Underperform rating on Tesla shares with a $189 price target.

The Thesis

Based on the estimated deliveries of 50,000 for the July-August period, Tesla may have to deliver about 34,000 vehicles in September to meet Credit Suisse's estimate of 84,000 deliveries for the third quarter, Levy said in a note. (See his track record here.) 

To meet the consensus estimate of 96,000, Tesla would have to deliver 46,000 vehicles in September, the analyst said. 

Going by Tesla's historical outperformance in deliveries in the final month of a quarter, Levy said he sees the potential for upside to both Credit Suisse's and the Street's estimates.   

Tesla has been offering significant discounts in September in the form of two years of supercharging for new Model 3 orders delivered by the end of the month; zero cash down loans for Model 3s; and allowing sales staff to waive fees for up to two features to match orders with inventory levels, the analyst said, citing media reports.

Strong volumes in September shouldn't come in as a surprise, he said. 

"That said, even if it meets consensus on deliveries, the question into 3Q EPS will be around margins + how the stock reacts with likely the first negative y/y revenue growth since 2012." 

The Price Action

Tesla shares were down 1.04% at $240.03 at the time of publication. 

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Photo courtesy of Tesla.