UBS Predicts Tesla Missing Market's Q2 Delivery Target by 25,000
UBS analysts believe that Tesla will not meet market expectations for deliveries in the second quarter of 2023. They forecast around 420,000 deliveries, which is a 10% decrease compared to last year but a 9% increase from the first quarter.
Deliveries Forecasted
UBS's new estimate of 420,000 deliveries is below the 445,000 consensus provided by Visible Alpha, a recognized financial data provider. However, this number still sits at the higher end of what UBS analysts expect, which ranges from 410,000-425,000.
UBS analysts point out that the stock market tends to react more to the actual results rather than the initial estimates. For instance, if Tesla delivers 420,000 vehicles, this real number will matter more than the early forecast of 445,000.
Regional Deliveries Insights
In the United States, UBS expects Tesla's deliveries to be slightly lower than in the first quarter. They believe this could be because a special 0.99% financing offer for the Model Y in May might have led people to purchase vehicles earlier, pulling sales from June into May.
In Europe, the analysts predict a significant drop in deliveries compared to both last year and the first quarter of this year. The reason is lower demand in important markets.
However, in China, the situation looks better. UBS expects a modest increase in deliveries both year-over-year and quarter-over-quarter.
Financial Impact
Apart from deliveries, UBS warns that Tesla’s gross margins (the profit made after subtracting the cost of goods sold) might be affected even though they expect improved deliveries in the US and China.
Tesla AI Day and New Vehicle Reveal
Tesla has an exciting event coming up called "Tesla AI Day" on August 8th. While this might generate buzz around Tesla’s Artificial Intelligence initiatives, UBS thinks the financial impact of these AI projects will be felt later. For now, investors should focus on the reveal of a new vehicle, which will likely influence earnings estimates for 2025 and 2026.
New Vehicle Expectations
UBS expects this new vehicle to be different from the Model 3 and Model Y but will have fewer features to keep the cost lower.
Stock Price Outlook
Finally, UBS suggests that Tesla’s stock price might not align with the current business fundamentals. This means the stock price could be influenced by investor interest in future growth prospects and AI developments rather than current performance.
Simple Terminology Explanation
Consensus: This is the average of analysts' forecasts. For instance, if 10 analysts predict deliveries, the consensus is the average of their numbers.
Gross Margins: This is the percentage of money left after subtracting the cost to produce Tesla's cars. So, if Tesla sells a car for $50,000 and it costs $40,000 to make, the gross margin is $10,000 or 20%.
Buy-side Expectations: These are predictions from analysts who work for investment firms (the "buy-side") as opposed to independent analysts (the "sell-side").
By explaining and breaking down these terms, even a housewife can easily understand what's happening with Tesla’s stock and delivery forecasts.
