Rating: Underweight
Price target: $200 (prior $215)
"Tesla's 1Q19 vehicle production & deliveries report was substantially worse than expected," analysts led by Ryan Brinkman told clients Thursday.
The firm drew five conclusions from the delivery figures.
1. Total deliveries of 63,000 missed the analysts' expectation for 70,500, and suggested "materially less 1Q revenue, margin, and free cash flow."
2. Vehicles in transit by quarter-end implied underlying domestic demand has fallen.
3. Similarly, a decline in higher-priced Model S and Model X deliveries — totaling 12,000 between them for the first quarter — again suggests slowing demand unrelated to "temporary delivery difficulties."
4. Tesla's reaffirmation that it would deliver between 360,000 and 400,000 vehicles this year "appears to clarify official guidance has in fact all along remained at 360-400k," undermining Musk's legal defense that he had not provided new information in his February tweet saying production would be 500,000 vehicles.
5. The clear difference between Musk's outlook and the company's official guidance "may hurt the perception of management commentary, eroding investor confidence and potentially placing additional pressures on the shares."