Tesla Stares At Another Sales Decline In Q2: Did China Save The Day For The EV Maker?

Tesla Inc TSLA shares rose in premarket trading on Monday as it preps to release the all-important second-quarter deliveries.

The Elon Musk-led company is widely expected to provide an update on its quarterly sales ahead of the market open on Tuesday.

Bar Set Way Lower: Consensus estimate shared by fund manager Gary Black puts deliveries at 440,000 units for the second quarter. If the number proves accurate, Tesla is all set to report its second straight quarter of year-over-year sales decline. A year ago, the company produced 479,700 cars and sold 466,140 units.

The whisper number — an unofficial number floating around on the Street — is far less at 420,000 (a 10% drop), Black said.

“There's a decent chance of an upside surprise on Tues, especially if we get another 17.5K weekly registrations out of China,” he said in a post on Friday. His optimism is also premised on the last two days of the quarter being over the weekend, which can pull in more deliveries.

In the first quarter, Tesla’s deliveries fell 8.5% year-over-year and over 20% sequentially to 386,810 units.

A few sell-side analysts took down their estimates for Tesla over the past two weeks. The revisions are as follows:

• RBC Capital Market’s Tom Narayan reduced his estimate from 533,000 units to 410,000 units.
• Barclays’ Dan Levy brought down his estimate from 444,000 units to 415,000 units.

Tesla typically shares a company-compiled consensus ahead of the official announcement.

China is a key market for Tesla both from the production and consumption perspectives. The electric-vehicle maker’s China sales performance for the first two months of the quarter are as follows:

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Adding up the weekly insurance registrations data for June, Tesla sold about 41,200 cars in China until June 23.

It also remains to be seen whether the company breaks out the Cybertruck numbers.

Future Perfect: Notwithstanding the near-term concerns, bullish analyst, including Wedbush’s Daniel Ives, are hopeful of the company turning things around. The analyst said in a recent note that China sales may have seen a “mini-rebound” in the second quarter, helping it to report closer to the consensus estimate.

The Street may have already discounted a soft second-quarter number and its core focus will be on the second-half unit recovery, price stabilization, China growth and the upcoming Aug. 8 Robotaxi Day, he said.

Analysts have come to recognize the reality that Tesla is not merely an EV company. “We continue to believe that Tesla is more of an AI and robotics play than a traditional car company,” Ives said.

Ives has an Outperform rating and $275 price target for Tesla shares.

Subdued Stock: Tesla has been among the worst-performing S&P 500 stock this year. That said, it has picked up some momentum in recent sessions, primarily due to expectations of a turnaround in the fundamentals and optimism regarding the Aug. 8 robotaxi unveil event.

In premarket trading, the stock climbed 1.84% at $201.53, according to Benzinga Pro data. The stock is down a little over 20% so far this year.

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