Why Tesla’s Stock is Falling Despite a Beat in Delivery Numbers

Tesla Inc.’s stock is reacting with a downturn despite the company slightly exceeding expectations for its vehicle delivery numbers in the latest quarter. Tesla reported delivering 462,890 vehicles in the third quarter, just surpassing the 462,000 units that analysts had predicted, according to FactSet data. Almost all of the deliveries came from the Model 3 and Model Y, with these two models accounting for 439,975 units combined.

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In the lead-up to the delivery report, analysts were optimistic about Tesla’s performance, a shift from previous quarters when concerns about demand were more pronounced. A Barclays analyst noted last week that some investors were already expecting Tesla to beat delivery forecasts for the quarter. The analyst’s personal estimate was 470,000 units, which was higher than what Tesla ultimately reported.

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Daniel Ives, an analyst at Wedbush, noted that Wall Street had set “whisper numbers” in the range of 465,000 to 470,000 units, which exceeded the 462,890 figure that Tesla posted. While Ives acknowledged that the result was a positive step for the company, he admitted that both he and the market had hoped for an additional 3,000 to 5,000 units over the reported number.

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Tesla’s stock had surged by more than 20% in the month leading up to the release of Wednesday’s delivery report. However, shares took a hit shortly after the market opened that day, falling over 3%.

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The Barclays team had predicted that Tesla’s delivery numbers would be driven by “surprisingly robust” trends in China, as well as increased production of the Cybertruck in the U.S. Piper Sandler analysts also shared an optimistic view regarding Tesla’s performance in China, suggesting that the company was likely to post its best quarter ever in that region.

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Tesla’s delivery report serves as a precursor to its full earnings report, which is scheduled for release on Oct. 23. While delivery numbers provide insight into demand, they don’t reveal the complete financial picture. Investors are keenly focused on Tesla’s margins, which will be detailed in the upcoming earnings report. Recent financial reports have indicated some pressure on Tesla’s margins, and analysts from Deutsche Bank recently projected that the company’s margin performance for the rest of the year could either remain flat or decline.

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According to Deutsche Bank, import tariffs may negatively affect Tesla’s deliveries in both the U.S. and Europe, though this impact is likely to be more pronounced in the fourth quarter than in the third. Additionally, while the ramp-up in Cybertruck sales is expected to boost revenue, it could have a dilutive effect on Tesla’s product mix. However, potential offsets could come from lower raw material costs, improved logistics, and better factory efficiency as production volumes increase.

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In addition to delivery figures, Tesla also provided data on its production numbers for the third quarter. The company produced a total of 469,796 vehicles, marking an increase from the 410,831 units it produced in the second quarter.

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While Tesla’s delivery numbers for the third quarter were better than analysts had forecasted, the market reaction suggests that expectations were already high. Investors may have been looking for an even larger beat, given the strong performance of the stock leading up to the report. The focus will now shift to Tesla’s upcoming earnings report, where the company’s margins and profitability will be scrutinized. Concerns remain about the impact of tariffs, product mix, and margin pressures, but Tesla’s production growth offers a positive sign for the future.

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