Tesla Sales Grow More Optimistic on Wall Street. Should You?

Investors are eagerly anticipating Tesla Inc.'s third-quarter delivery report, which is expected to be released within the next week. These delivery numbers, seen as a proxy for the company’s sales performance, are crucial for gauging Tesla's overall business health, and Wall Street analysts have recently raised their forecasts in anticipation of the announcement.

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Unlike many companies, Tesla doesn’t provide an exact date for when it will release its quarterly delivery and production data. The automaker also doesn’t break down its sales by region or provide other specific details, choosing instead to group its figures by car model. Tesla generally reports sales for its Model 3 and Model Y, along with a combined figure for its other models. Despite this limited data, the company's delivery reports are closely scrutinized by investors, and Tesla’s stock often reacts significantly to the results.

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UBS analyst Joseph Spak has adjusted his forecast and now expects Tesla to deliver around 470,000 vehicles for the third quarter. This is an increase from his previous placeholder estimate of 421,000 vehicles. Spak noted that based on his conversations with investors, the market expects deliveries to range between 465,000 and 480,000 vehicles, placing his estimate toward the lower end of this range.

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According to FactSet, the consensus forecast is for Tesla to deliver approximately 462,000 vehicles in the third quarter. If that estimate holds, it would represent a 6% increase compared to the 435,000 vehicles Tesla delivered in the same quarter of 2023. In the U.S., Tesla has been offering financing promotions in an effort to boost sales, Spak mentioned.

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Piper Sandler analysts, led by Alex Potter, have also increased their delivery expectations for Tesla, predicting that the company will deliver about 459,000 vehicles in the quarter. They have similarly adjusted their full-year forecast for Tesla, now expecting the automaker to sell around 1.75 million vehicles, which represents an upward revision of 23,500 vehicles from their previous estimate.

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The Piper Sandler team noted that Tesla’s performance in China during the third quarter is expected to be particularly strong, likely marking the company’s best quarter ever in the region. However, they acknowledged that sales in Europe have been weaker. In the U.S., Tesla’s upcoming Cybertruck is expected to help support demand, especially as deliveries of the highly anticipated vehicle are set to begin soon.

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Analysts' expectations for Tesla’s China sales are based on weekly vehicle registration data, which has given them strong confidence that Tesla will have delivered about 175,000 vehicles in the region during the quarter. While these sales figures are important for Tesla’s profitability, Piper Sandler’s Potter suggested that the company’s upcoming "robotaxi" event, scheduled for October 10, is likely to garner even more attention. Tesla is expected to unveil significant advancements in its robotaxi technology at this event, and these discussions could overshadow the quarterly sales results.

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Deutsche Bank analysts expect Tesla to reveal its much-anticipated "CyberCab" at the robotaxi event or at least provide a demonstration of its robotaxi technology. They are also looking for updates on key operating metrics, such as cost per mile, the scale of operations, and a potential timeline for when the robotaxi service could launch. Additionally, there are expectations that Tesla may unveil a cheaper electric vehicle, rumored to be called the "Model 2."

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While Deutsche Bank remains generally optimistic leading up to the event, the analysts cautioned that the high expectations surrounding the unveiling could lead to a “sell the news” reaction in the market, where the stock might decline after the event, despite positive developments.

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Meanwhile, RBC Capital analysts, led by Tom Narayan, have also raised their third-quarter delivery expectations for Tesla, now forecasting 460,000 vehicles, which is a 1.3% increase from their previous estimate. They, too, are optimistic about Tesla’s performance in China, projecting that third-quarter sales in the region will be up 24% compared to the second quarter. Tesla’s sales in China have been on the rise, with July and August showing growth, and recent weekly insurance data for September indicating that the positive trend has continued.

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Tesla usually announces the date for its quarterly earnings release alongside its delivery report. Despite the excitement surrounding the third-quarter numbers and upcoming events, Tesla's stock performance has lagged behind the broader market. The company’s shares have risen by 2% this year, significantly underperforming the S&P 500, which has gained 20% over the same period.

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In summary, while Tesla’s third-quarter delivery numbers are expected to show growth compared to last year, much of the market’s focus is shifting to the company's future, particularly with its advancements in robotaxi technology. Investors and analysts alike are eagerly awaiting both the delivery report and the upcoming robotaxi event, with the potential for significant developments in the company's trajectory.

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