Tesla's Q1 Delivery Shortfall Sparks Nearly 14.5% Stock Decline


Analyst sees 79% upside for Tesla despite delivery miss and mixed market sentiment, highlighting growth in FSD and energy storage.

By Barry Stearns

4/3, 19:22 EDT
Tesla, Inc.

Key Takeaway

  • Tesla's Q1 vehicle deliveries fell short of expectations, causing a nearly 14.5% stock decline over the last 12 months.
  • RBC Capital Markets remains bullish, setting a target price of $298 for Tesla, indicating a potential 79% upside.
  • Analyst opinions on Tesla are mixed, with an average price target of $198.87 suggesting a 19.4% potential upside.

Tesla's Delivery Shortfall

Tesla Inc., the electric vehicle behemoth led by Elon Musk, has recently encountered a significant hiccup in its journey, with its stock taking a hit after the company reported first-quarter vehicle deliveries that fell short of analysts' expectations. The company delivered 386,810 vehicles in the January to March quarter, a figure notably below the roughly 457,000 analysts had predicted. This shortfall has contributed to a nearly 14.5% plunge in Tesla's stock over the last 12 months, raising eyebrows among investors and market analysts alike.

Analyst Optimism Amid Concerns

Despite the recent delivery miss and the stock's underperformance, some analysts remain bullish on Tesla's prospects. Tom Narayan from RBC Capital Markets, for instance, sees a silver lining, particularly in the longer term. He notes, "The stock, despite this performance today, is only down like 4.5%, which makes me think that expectations are already really low." RBC Capital Markets maintains an outperform rating on Tesla with a target price of $298, suggesting close to a 79% potential upside. This optimistic stance, however, stands in contrast to the broader market sentiment and the immediate challenges facing the company.

Skepticism Over Full Self-Driving and Growth Prospects

Narayan highlights Tesla's full self-driving (FSD) product and its energy storage segment as key areas of growth. The recent release of FSD version 12 has garnered positive reactions, potentially serving as a catalyst for showroom visits, subscriptions, and ultimately, vehicle purchases. However, the enthusiasm for Tesla's FSD and energy storage capabilities must be tempered with caution. The autonomous driving space is fiercely competitive and fraught with regulatory hurdles, casting doubt on the timeline for widespread FSD adoption and profitability.

Moreover, while Tesla's ventures into energy storage and autonomy are promising, they are not without their risks. The energy sector is notoriously volatile, and Tesla's success in this arena is far from guaranteed. The company's heavy reliance on the automotive business means that any significant disruption, such as the recent delivery shortfall, can have a profound impact on its overall financial health.

Market Sentiment and Analyst Ratings

The mixed analyst ratings on Tesla further underscore the uncertainty surrounding the company's future. Out of 51 analysts covering Tesla, 17 give the stock a buy or overweight rating, while 24 have a hold rating, and 10 have a sell or underweight rating. The average price target among these analysts is $198.87, indicating a 19.4% potential upside. This divergence in analyst opinions reflects the complex landscape Tesla navigates, balancing groundbreaking innovation with operational and market challenges.