The share price of electric vehicle (EV) manufacturer Tesla (NASDAQ: TSLA) could see potential upside, driven by projections of impressive Q3 2024 deliveries.
The company is expected to deliver 460,000 vehicles, aligning closely with the market consensus of 461,000—a 6% year-over-year increase and a 4% rise from Q2 figures, according to estimates by Wolfe Research.
The firm’s stock analyst Emmanuel Rosner indicated that China will likely achieve a record delivery figure of 172,000, offering some relief as Europe is expected to post disappointing numbers. Meanwhile, North America is projected to show flat deliveries, though momentum is anticipated to remain steady.
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In addition to the potential for strong delivery numbers, Wolfe Research cautioned that the Texas-based firm may continue to face concerns around profitability, extending from Q2. Notably, in the second quarter, Tesla’s gross margins fell to 14.6% due to price cuts, particularly involving the Model Y.
Tesla, led by Elon Musk, has continued offering incentives to attract buyers. However, the analyst at Wolfe Research warned that these extensive incentives could reduce global revenue per unit by $550 and total price cuts by $1,000 per vehicle.
“One of the bigger near-term debates will likely focus on profitability, particularly Q3 Auto Gross Margins excluding credits. We anticipate a modest quarter-over-quarter improvement in Auto Gross Margins ex-Credits to 15.2% in Q3. We estimate EPS in the low-60c range, close to the consensus of 61c. We maintain a Peer Perform rating on Tesla shares,” Rosner stated.
Tesla’s delivery numbers impact on TSLA shares
Regarding stock movement, Rosner maintained that TSLA could see positive momentum in the coming days, citing the impact of new product lines, specifically the unveiling of the Robotaxi.
“In the interim, TSLA will be hosting its much-anticipated Robotaxi event on October 10. We continue to view the run-up to this event as a potential near-term positive catalyst for stock,” the analyst added.
The research firm also noted that Tesla may be able to ease current pricing pressures once it launches low-cost models in 2025, a move likely to translate into more profits.
Elsewhere, Deutsche Bank shared this positive outlook and rated Tesla as a “Top Pick.” The bank’s analyst, Edison Yu, maintained a buy rating while setting a price target of $295.
According to the expert, the projection is based on the view that the company is more than an EV firm but rather a technological entity with the ability to influence different sectors.
In the wake of the delivery estimates, Tesla’s share price is extending its recent high, trading at $227 as of press time, reflecting 24-hour gains of 0.3%. The momentum has led the stock to gain over 31% in the past month.
In summary, Tesla’s strong Q3 delivery projections and strategic initiatives offer a promising outlook for its stock. While the company faces ongoing profitability concerns, the Robotaxi and future low-cost models—position it well for long-term growth.
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