Tesla Disappoints Analysts, Attention Shifts To Margins As EV Maker 'Undermines' Profitability

Tesla Inc TSLA shares are skidding on the heels of somewhat disappointing production and delivery numbers.

With first-quarter earnings on the horizon, all eyes are on margins and profitability as the Austin, Texas-based company continues to sting the competition. 

The Details: Tesla produced 440,808 vehicles in the first quarter, up from 439,701 last quarter and strong enough for a majority of analysts. The EV maker delivered 422,875 vehicles in the quarter, which came in below most forecasts.

See Also: Tesla Q1 Deliveries Weathered 'Murky Marco,' Says Analyst — Why It's Positive For Bulls

Why It Matters: The delivery numbers were a bit soft, but analysts need margin and profitability data in order to understand the whole story. 

CFRA called the release a "mild disappointment," however the firm reiterated its strong buy rating as it sees a lot of positive momentum drivers ahead. The analyst firm highlighted the ramping of Tesla factories in Austin and Berlin as well as Cybertruck deliveries quickly approaching, which CEO Elon Musk teased in a tweet over the weekend. 

Bernstein expressed a similar sentiment noting that deliveries were "OK" and largely in line with estimates. 

"The key question for investors is what might margins be," Bernstein analysts wrote in a new note to clients. 

Commodity costs are improving, but Tesla has implemented several price cuts in recent months, which is likely to weigh on margins. The analyst firm also anticipates that more price cuts will be necessary this year in order to meet volume targets.

Those price cuts "have and will undermine industry profitability," Berstein added. 

Oppenheimer analysts pointed out that deliveries for Model S and Model X vehicles were significantly below expectations, while Model 3 and Y deliveries showed strength. 

Like other analysts, the firm highlighted margin concerns as the "key question" moving forward. 

"While we remain on the sidelines, we view vehicle sell-through as positive in sum, but continue to have reservations about mix and margins meeting expectations in 1H23," Oppenheimer analysts wrote in a new note.

RBC Capital Markets highlighted the split between production and delivery numbers, which it attributed to logistics. It also noted that Model 3 and Y deliveries carried the numbers, while S and X deliveries were down both year-over-year and sequentially. 

RBC also believes Tesla will continue to adjust prices as needed to help keep demand high, but the firm sees this as a positive as the EV maker is "more capable of absorbing price cuts" than the majority of its competitors. 

TSLA Price Action: Tesla has a 52-week high of $384.15 and a 52-week low of $101.81. 

The stock was down 4.45% at $198.19 at time of publication, according to Benzinga Pro.

Photo: Courtesy of Tesla.