Tesla: Q1 Delivery Miss Secured, Future Quarters May Be Worse

Apr. 05, 2019 10:59 AM ETTesla, Inc. (TSLA)VWAPY612 Comments
Fishtown Capital profile picture
Fishtown Capital


  • Tesla Q1 deliveries came in lower than anyone expected at 50,900 Model 3 and 12,100 Model S and X.
  • This dramatic miss happened despite three rounds of price cuts and the introduction of the cheaper SR/SR+ variants.
  • Despite Tesla reaffirming full year guidance, I believe future quarters will be worse as more competition arrives, international order books are depleted, and the FIT credit is eliminated.

Tesla (NASDAQ:NASDAQ:TSLA) has finally released its Q1 Deliveries update. While all but the most bullish shareholders expected a sequential decline, very few expected sales to drop as far as they did, especially with three rounds of domestic price cuts, introduction of EU and China Model 3 sales, and the introduction of the long anticipated $35,000 SR and $37,500 SR+ variants. The FactSet Q1 deliveries estimate was walked back several times in Q1, and Tesla still badly missed reduced guidance.

In my last Tesla article, I successfully predicted, in early January, that a Q1 Sales miss seemed likely, due to demand pull forward from the reduction in the FIT credit, questionable EU demand, and increased competition for Model S and X. Despite Tesla reaffirming full year guidance in their report, I am confident that future periods will have lower sales with lower ASP's, especially as Tesla's access to the FIT credit is reduced another $1875 on July 1st and eliminated 6 months after. I believe the same events that had me correctly predict the Q1 shortfall will intensify in coming quarters.

Global Model S/X Demand

Tesla sold 12,100 Model S and X worldwide in Q1, versus my original prediction of 17,332. My prediction did not take into account the elimination of the S75/X75 trims and the series of price changes throughout the quarter that likely confused buyers. Assuming the S75/X75 are not reintroduced, I see sales falling even further below these levels. Many bulls claimed that credible EV competition, especially at the high end, would not impact sales, but Q1 in Norway told a different story

The Audi (OTCPK:VWAPY) E-Tron only launched in February and outsold the Model X. When it is introduced in the US this Summer, I expect to see a similar trend, further impacting S/X sales. The total addressable market for $75,000+ electric

This article was written by

Fishtown Capital profile picture
Individual investor and family office principal with over 20 years of investment experience. I favor fundamental analysis and look for individual issues and asset classes that are out of favor and represent a good risk/reward trade off. I often employ options strategies, covered calls on companies I own that have gotten ahead of themselves, and writing puts on stocks that I'd like to own at lower prices.Educational background Finance MBA (NYU Stern) with Computer Science undergraduate.

Disclosure: I am/we are short TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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