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Tesla Inc. (NASDAQ: TSLA) Disappoints with Q1 Deliveries, Shares Back To ‘Buy Point’

Tesla Inc.’s (NASDAQ: TSLA) shares plunge over 4.51% to $198.15 in early trading session on Monday, returning to a buy point. Tesla deliveries reached a record in the first quarter thanks to significant price reductions across the board and tax benefits in the United States, but the electric vehicle manufacturer once again missed expectations. Experts forecast that pricing pressure on Tesla (TSLA) would persist in Q2.

The first quarter saw a 68% increase in TSLA shares, which peaked on Friday.

Tesla deliveries increased by 36% to 422,875 from a year earlier. It was 4% more than the previous high in Q4 of 405,278. Nevertheless, according to FactSet, Wall Street had anticipated a total of 431,000 Tesla deliveries. Tesla did, however, surpass several other popular projections. Deliveries for the first quarter comprised 412,180 Model 3 and Y vehicles as well as 10,695 premium Model S and X vehicles. At 440,808, production once more outpaced delivery. Production of the Model S and X reached 19,437.

Tesla has often fallen short of its projected delivery times. Analysts anticipated about 420,000 for Q4. Tesla deliveries are expected to increase from 1.313 million in 2022 to about 1.8 million in 2023, according to analysts. In early Monday trading, Tesla shares fell 3.2% to 200.73, challenging Friday’s breakthrough.

According to MarketSmith research, Tesla stock increased 6.2% on Friday to reach 207.46, passing a 200.76 cup-with-handle buy target. Shares, however, are very near their 200-day moving average, which might act as resistance.

Tesla (TSLA) shares dropped more than 12% on January 3, the day after it failed its fourth-quarter delivery projections. The worst day for Tesla shares in 2023 was still that one. Nonetheless, shares have recovered this year, rising by over 68%. On January 6, when the EV giant announced significant price reductions in China and Asia and as the market staged a follow-through day, Tesla shares hit a bottom. On January 13, Tesla followed up with price reductions in the US and Europe. The EV manufacturer has since lowered the prices for the Model S and X in both Europe and the United States.

Demand for Tesla was also boosted by new tax incentives in the US worth up to $7,500.

Now that the deliveries are through, the next concern is how the price reductions impacted Tesla’s revenue and gross margins. On April 19, the EV juggernaut is scheduled to release Q1 results.

Tesla shares received a “Strong Buy” rating boost from CFRA analyst Garrett Nelson on Friday. Also, the analyst raised the company’s TSLA price objective from 250 to 275. Despite the missed delivery, Nelson kept his rating and price target for Tesla shares unchanged on Monday. “The Tesla narrative has a lot going for it and we continue our Strong Buy rating,” the analyst stated.

However the news of OPEC’s unexpected output reduction, which spiked oil prices and Nelson believes is optimistic for EV sales, would likely dampen any negative stock price reaction to the publication, he added.

Tesla Stock Analysts: More Price Cuts Needed

Itay Michaeli, an analyst at Citigroup (NYSE: C), however, predicted a modest decline in Tesla shares following its delivery report on Monday. The expanding gap between production and delivery, according to Michaeli, will probably keep the focus on further price reductions in Q2.

According to the Citigroup analyst, TSLA shares may marginally decline as Q1 deliveries are expected to be in line with expectations due to a worse mix and ongoing worries about inventory buildup. Tesla Q1 deliveries were essentially anticipated, according to Bernstein analyst Toni Sacconaghi, who also stated on Monday that more price cuts are required. Tesla stock is rated “Underperform” by Bernstein, with a 150 price target.

In order to hit its volume goals, “we continue to expect that TSLA will need to further cut pricing this year and/or next year,” Sacconaghi said.

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