Tesla (TSLA) is expected to release second-quarter global shipping data this weekend, giving investors a glimpse of how the company's pricing and discounting policies have helped attract consumers to the brand. Meanwhile, Tesla stock was downgraded four times ahead of the release, with analysts expecting the vehicle price to continue to weigh on gross margins.
Tesla is expected to announce record second quarter deliveries on Sunday, July 2nd. According to FactSet, Wall Street is forecasting a 74% increase in Tesla deliveries to 445,000. The sharp year-over-year increase reflects easy comparisons to the second quarter of 2022, when Tesla's Shanghai plant was closed for several weeks due to Covid lockdowns. The plants in Berlin and Austin, Texas also slowly increased their production.
On Monday, Deutsche Bank raised its price target on TSLA stock to 230 from 200, while maintaining a buy rating on the stock.
The company revised its estimate for second-quarter deliveries to 448,000 units, beating analyst consensus. Deutsche Bank forecasts approximately 168,000 vehicles sold in North America, 153,000 in China, 87,000 in Europe and 23,000 in the rest of the world.
Meanwhile, Guggenheim also raised the company's price target on Tesla stock to 112 from 105 on Monday, while maintaining its sell rating. Guggenheim forecasts 446,000 units shipped in the second quarter. The company believes that quarter-end vehicle incentives and rebates could boost sales.
Tesla stock's two gains come as the global EV giant has received four downgrades in the past six days, including corrections from Goldman Sachs and Morgan Stanley.
Tesla shares fell 6.1% to 241.05 during Monday trading and moved towards the 21-day moving average on above-average volume. Shares fell 3% to 256.60 on Friday. Last week, TSLA fell 1.5%. Shares are up around 20% in June.
Tesla is trying to move inventory
Tesla has been working to shift inventory before the end of the quarter and is offering discounts and special offers through the end of June.
According to the company's website, the electric giant began offering three months of unlimited free charging to customers who order a Model 3 between June 14 and June 30 in mid-June.
In China, Tesla is again offering insurance subsidies for Model 3 vehicles. According to CnEVPost, customers in China who purchase and deliver a production rear-wheel-drive Model 3 vehicle before the end of June are eligible for an insurance subsidy of approximately $1,120.
In early June, Tesla also received all Model 3 vehicle amenities eligible for the full $7,500 Inflation Reduction Act (IRA) tax credit. Tesla's Model 3 and Model Y vehicles are all eligible for the $7,500 tax credit.
Tesla stock: Huge expectations for deliveries in 2023
Analysts are forecasting around 1.82 million Tesla deliveries in 2023, up from 1.313 million in 2022.
In April, Tesla CEO Elon Musk told analysts that Tesla was “happy” with its 2023 production target of 1.8 million. However, he downplayed the 2 million production number he was using at the end of the fourth quarter.
“These are volatile times,” Musk said. “If everything goes well, from a production point of view, we have a chance of 2 million vehicles. But that's the positive.”
Tesla has not announced a delivery target for 2023.
In the first quarter, Tesla deliveries rose 36% year over year to 422,875. That was up 4% from the previous record of 405,278 in the fourth quarter. However, Wall Street expected around 431,000 Tesla deliveries. Deliveries in the first quarter included 412,180 Model 3 and Y vehicles and 10,695 luxury Model S and X vehicles. Production again exceeded deliveries at 440,808. Production of the Model S and X stood at 19,437.
According to data compiled by industry analyst JATO Dynamics for Motor1, the Tesla Model Y was the world's best-selling vehicle of any type in the first quarter. According to data from 53 markets and estimates for the rest of the world, 267,200 Model Ys were sold in the first quarter.
Tesla only has four models, with the majority of sales coming from the Model Y crossover SUV. However, the Cybertruck is expected later this year. There's also the specter of a facelifted Model 3. However, it's unclear what changes those will be.
This Cathie Wood stock even outperforms Tesla
Tesla shares are up 96% in 2023 and 137% since their Jan. 6 low. However, Tesla is well below the all-time high of 414.50 set in November 2021.
Tesla has moved well past a buy point of 207.79, which is either a cup or double bottom basis. It's possible that TSLA is coming to grips with a consolidation that stretched back to late September. However, Tesla could use a grip with some length and depth.
Shares are about 23% above their 200-day moving average despite the recent drop.
Analysts remain concerned that price cuts could weigh on gross margins and TSLA valuation.
On April 19, Tesla reported a sharp decline in first-quarter earnings while revenue fell short of expectations. The global electronics giant's profit margins also slipped below 20% as the company implemented an aggressive price-cutting strategy in the first half of 2023. Tesla reported a 24% increase in revenue to $23.33 billion on earnings of 85 cents a share, down 20% from 2022.
The EV company's total gross profit was $4.5 billion, with Tesla's gross profit margin coming in at 19.3%, down from 23.8% in the fourth quarter and 29.1% a year earlier.
Auto gross margins excluding government loans and leases declined to 18.3% from 23.8% in the fourth quarter. That stays below Tesla's previously targeted “floor” gross margin target of 20%.
Tesla stock ranks third in IBD's automaker industry group. It has a composite rating of 99 out of 99. Tesla has a relative strength rating of 92 and its EPS rating is 93 out of 99.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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