Going Through The Tesla Deliveries Oddity

Feb. 21, 2014 2:31 AM ETTesla, Inc. (TSLA)232 Comments

First of all, since Tesla (NASDAQ:TSLA) stock jumped after reporting earnings, some people are kind of thinking that my article "Tremendous Risk Awaits Tesla Investors In Q4 2013 Earnings Release" was wrong. Nothing could be further from the truth - the article predicted exactly what Tesla reported.

It predicted both the yearly deliveries guidance:

So the question here is, what development would either validate or invalidate this new thesis? That's where the Q4 2013 report becomes important, particularly the part about forward Q1 2014 and 2014 guidance. It's easy for the company to guide 2014 towards to the expected 35,000 or 40,000 deliveries since those don't need to be produced immediately, but doubts quickly crop up if near-term Q1 2014 guidance reflects stable or lower deliveries.

Tesla guided towards 35000 deliveries in 2014.

And the quarterly deliveries guidance:

Incoming data for January 2014 Model S sales in Tesla's main markets again call into question the thesis that Tesla is production-constrained. The publicly available data regarding January 2014 sales implies lower Model S sales on all of Tesla's main markets simultaneously (when sequentially compared to Q4 2013).

With Tesla's Q4 2013 report, we'll get guidance for Q1 2014 as well as for the whole of 2014. If this guidance is somehow flat or down from Q4 2013's 6900 units, then the production-constrained thesis fails. If this happens, the stock might well suffer considerably. There is thus, tremendous risk in the earnings release for TSLA longs.

Tesla guided towards 6400 deliveries in Q1 2014, which is lower (flat to down) than the 6900 delivered in Q4 2013.

Second, what does this lowered deliveries guidance mean?

While the entire market seemed to be concentrating on the dream of growth to be, Tesla predicting lower deliveries in Q1 still has significance. Tesla knows this, and quickly

This article was written by

Paulo Santos profile picture
Author of Idea Generator
Our goal is to beat the S&P500 and to provide consistent positive returns.

Portuguese independent trader and analyst. I have worked for both sell side (brokerage) and buy side (fund management) institutions. I've been investing professionally for around 30 years.

I have a Marketplace service here on Seeking Alpha called Idea Generator that's focused on real-time actionable ideas based on valuation and catalysts. The Idea Generator portfolio has beaten the S&P 500 by more than 51% since inception (2015).

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