Tesla’s stock dropped by about 5% after the company reported lower-than-expected vehicle deliveries for Q3 2024. Tesla delivered 435,059 vehicles, falling short of Wall Street estimates of 456,722. This drop is attributed to planned factory upgrades that temporarily impacted production. The deliveries of its popular Model 3 and Model Y also missed expectations, raising concerns about the company’s ability to meet demand amid increasing competition in the EV market. Tesla aims to recover in Q4 as factory output stabilizes.
Tesla’s Q3 2024 Delivery Miss: What It Means for Investors
Tesla’s stock took a hit recently, dropping over 5% after its third-quarter 2024 car deliveries came in slightly below some of the more optimistic forecasts on Wall Street. Despite delivering 462,890 vehicles, a figure that exceeded the consensus projection of 462,000, the company fell short of more bullish estimates from analysts at Barclays and UBS, who expected deliveries closer to 470,000. This shortfall contributed to a more than $40 billion drop in market value and shares fell to $245 by mid-day on Wednesday.
Tesla’s Q3 2024 Deliveries: Falling Short of High Expectations
Company saw year-over-year delivery growth for the first time in 2024, with a 6% increase compared to the same quarter last year. This was an improvement from the declines seen in the first and second quarters, but it wasn’t enough to match the aggressive forecasts some analysts had hoped for. The company’s total production for the quarter stood at 469,796 vehicles, with a slight overproduction leading to around 7,000 excess units sitting in inventory.
Company production figures also raise concerns among investors. While the company is producing more vehicles than ever, the demand may not be keeping up. This is particularly concerning given company’s previous delivery targets, including a highly ambitious goal of reaching 2 million deliveries by the end of 2024—a goal that now seems out of reach unless the company sees a dramatic surge in the fourth quarter.
Why did Tesla’s stock drop after its Q3 2024 deliveries report
It dropped due to the delivery numbers meeting, but not exceeding, analysts’ expectations. While Tesla delivered 462,890 vehicles, beating the consensus forecast of 462,000, it fell short of more optimistic projections like those from Barclays (470,000). Investors often have high expectations, and when those aren’t surpassed, stock prices can react negatively. Tesla’s stock fell by over 5%, erasing more than $40 billion in market value
Stock Reaction and Market Impact
Despite exceeding average analyst expectations, Tesla’s stock dropped sharply after the report. It has historically faced significant stock price fluctuations in response to its delivery reports, and this quarter was no different. Analysts pointed to several factors contributing to the stock’s decline, including the missed higher-end delivery estimates and concerns over profitability due to increased production costs and ongoing price cuts.
Tesla’s stock has been highly volatile throughout 2024. While it is still up slightly for the year, it has underperformed compared to the broader market. Tesla’s stock is up about 0.5% year-to-date, compared to a 35% rise in the S&P 500. Other automakers like General Motors have seen much stronger performance, while rivals like Rivian have struggled even more, with their stock down by more than 50%.
Challenges Ahead: Can Tesla Turn Things Around in Q4?
Looking ahead, Tesla is facing several challenges that could make it difficult to maintain its current momentum. Analysts are predicting a target of 485,000 deliveries for the fourth quarter, but this would still leave short of its 2024 delivery target. If fails to meet this target, it would mark the company’s first annual contraction in vehicle deliveries since at least 2015.
Efforts to ramp up sales in China, one of its largest markets, have also been a mixed bag. The company introduced a 0% interest financing plan in China to boost sales, and while this helped increase deliveries, some analysts worry that this strategy could hurt margins. Additionally, faces increasing competition from Chinese automakers, which have also reported strong delivery numbers for Q3.
The Road Ahead: What’s Next for Tesla?
Despite the challenges, Elon Musk has remained optimistic, pointing to the company’s upcoming autonomous driving technologies as a key growth driver for the future. Tesla’s focus on innovation, including the highly anticipated Cybertruck and advances in battery technology, could help it maintain its competitive edge in the rapidly growing electric vehicle market.
However, for the time being, investors remain cautious. Will need to deliver a strong fourth quarter to avoid a disappointing year overall. The company’s Q3 earnings report, scheduled for later this month, will provide more insight into its financial health and the impact of recent price cuts and production increases on profitability.
Conclusion
Third-quarter delivery miss highlights the challenges the company faces in balancing production growth with maintaining profitability. While the company remains a leader in the electric vehicle market, investors should keep a close eye on Tesla’s Q4 performance, particularly its ability to meet delivery targets and manage costs in an increasingly competitive market.
Faq’s
How does Tesla’s Q3 2024 delivery compare to previous quarters?
Tesla’s Q3 2024 delivery of 462,890 vehicles represented a 6% year-over-year growth, which is its first quarterly increase in 2024. This marked a turnaround from the 9% and 5% annual declines seen in the first and second quarters of the year.
What were analysts expecting for Tesla’s Q3 deliveries?
Analysts had varied expectations. The consensus estimate, according to FactSet, was 462,000, while others like Barclays and UBS had higher forecasts at 470,000. Managed to beat the consensus estimate but fell short of the higher-end projections, which disappointed some investors.
How does Tesla’s Q3 delivery impact its overall 2024 performance?
Despite the growth in Q3, Tesla’s total 2024 deliveries are expected to fall short of last year’s total. Estimates suggest the company will deliver about 1.78 million vehicles in 2024, down from 1.81 million in 2023, marking its first year-over-year contraction in deliveries since 2015.
What factors affected Tesla’s delivery numbers in Q3 2024?
Deliveries in Q3 were bolstered by low-interest financing offers and attractive lease deals, such as a $299/month lease for the Model 3. However, competition from other automakers, an aging vehicle lineup, and price cuts to boost demand have impacted its performance. Tesla’s average vehicle sale price in Q3 was $42,500, the lowest in four years.
How has Tesla’s stock performed compared to other car manufacturers in 2024?
Tesla’s stock has underperformed compared to other U.S. car in 2024. While Tesla is down around 0.5% year-to-date, General Motors (up 40%) and Ford (down 6%) have seen mixed performances. Rivian, another electric vehicle maker, has faced significant struggles, with its stock down 56%.
