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Tesla: Be Ready For A Big Q1 Miss

Mar. 09, 2020 1:36 PM ETTesla, Inc. (TSLA)255 Comments
MangoTree Analysis profile picture
MangoTree Analysis


  • Tesla shares, as of writing, are off ~31% from their highs. While I believe the stock is around fair value long-term, I am not quite ready to begin another position.
  • Investors could get even more attractive, long-term entry points in the stock. Q1 and potentially Q2 results could be abysmal relative to consensus expectations.
  • I do not anticipate that TSLA will "comfortably exceed" 500K units in 2020. It will take a second-half miracle to see the company get to these numbers.
  • While I am a long-term bull, I am not long the stock. Wait for an even greater, inevitable pullback. Coronavirus-related weakness is not priced into estimates. Model Y may not have the initial demand investors are anticipating.
  • Rating reiterated at HOLD; PT remains $680. Waiting for a fundamental bottom before upgrading.

Tesla Resets

Tesla's (NASDAQ:TSLA) shares are ~31% off their highs as of writing. While I am long-term believer in both the business and the stock, analyst expectations for the quarter seem to be way too high. I believe Tesla will see deliveries drastically underwhelm consensus expectations. This could cause an even greater reduction in the stock price, and a fundamental bottom.

Expectations Vs. Reality

Investors have been trading the stock upwards for the last few months, with the stock going downright vertical since the new year. To be clear, I am not a bear on the stock long-term, but expectations for the year and Q1 in particular need to be reset. Last I checked, Q1 consensus was for Tesla to deliver ~99K cars in Q1. Looking back at Q1 of last year, Tesla saw a sequential decline of 63.6% in U.S. Model 3 deliveries. Keep in mind the Q4'18-Q1'19 dynamic Tesla saw: a pull-forward of demand (tax credit reduction), seasonality that it had never previously experienced, resource diversion towards getting cars overseas, and backlog depletion. So basically, this was the perfect storm heading into Q1. This year however Tesla has figured out overseas logistics, is operating on organic demand (rather than pent-up backlog), and didn't see a large pull-forward. The only constant here is the seasonality of the auto business. For this reason, the sequential bumpiness should ease significantly.

It is estimated that Tesla delivered ~47.2K Model 3s in the U.S. last quarter. Assuming a 25% sequential drop-off in deliveries, we get to around 35,456 Model 3s. Assuming that Tesla sold 47.2K Model 3s in the U.S. last quarter, the rest of the units likely were Europe sourced. So that means in Q4, Tesla saw around 45,345 units. A lot of the dynamics at play last year in Q4'18-Q1'19 in the US

This article was written by

MangoTree Analysis profile picture
(10/1/23): MTA is focused on L/S ideas primarily in the TMT space. MTA's investment process is environment agnostic, and views each opportunity through the lens of generating alpha against whatever timetable is appropriate for the idea. MTA employs a mock sell-side coverage process, utilizing valuation methodologies, ratings and price objectives, and takes advantage of alternative data.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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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Comments (255)

Nick Cox profile picture
If that is a big Q1 miss I can't imagine what a successful Q1 would have been like.
Record sales in the time of COVID19 just show once again how SAD these Tesla hatchet jobs have become.
@fairestcape....your disdain for Americans is almost palpable...but, you lack objectivity on every level-topic.
Tesla...truly, innovation and vision is great, love the technology, but, after 15 years, when does it become a real company that ACTUALLY TURNS A PROFIT...idiot business leadership, idiot investors. No different than your claim on Trump and Americans during your snotty rant, Musk is such a fame hungry selfish brat, he doesn’t have the wherewithal to keep it in the garage until it’s ready.

America....Home of the Brave (see both WWars)...Land of the Free...In God we Trust...let the haters hate, you don’t have a clue. Your just crying about Trump like the rest.
Chariot of Fire profile picture
My question is why the huge runup in Stock Value? Just seems strange it started in Dec 2019 while the Wuhan Virus started to go spread in China, Was there any real reason for the explosive growth in stock? Hindsight is 20/20 but China auto sales have crashed. Volatile stocks is a game for the big boys only
How is TSLA in a stronger position today than it was a year ago at 200? Answer: it's not.
Beware tesla shareholders. The bull market is over. Mr. Grim reaper paid a visit to Boeing, when will He visit Tesla?
blacky_ profile picture
After Q1 earnings latest.
Davewmart profile picture

There are all sorts of things that might be stuffed into Q1 earnings, regulatory credits and so on.

Any drop, if there is one in this insane market, normally happens after the 10Q, when the reality behind the gloss is at least partially apparent.
Unfortunately for Tesla I don't see a bright future ahead for them, I love what they are doing but extended to much the business in terms of expenses. For the moment is not the best way to travel with electric cars, first because the battery manufacturing is costly (extracting mentals and all composits, buildings blocks of cell are still expensive, tariffs war with China, and so on), also recycling batteries are expensive and still inefficient. Hunday is coming fast with hydrogen technology which is more efficient I believe, time will tell. Also, ahead I see a down turn of economics in all countries, part because of this pandemic, part of poor economics decisions.
Think Long Term profile picture
I can’t believe anyone in their right mind would buy or hold this worthless stock right now. Just plain stupidity and greed.
Captain Crook profile picture
It might be as simple as having an environmental conscious, something I am aware of very few Americans have. You are per capita the Worlds largest energy users and polluters. You have even elected a Dotard-In-Chief spreading lies and fake news.
fairestcape profile picture
So true... Trump personifies the average American... Greed, graft and self-enrichment at any price. Americans look at Trump and he embodies all they aspire to (hence his election). Americans will screw over their own mother if it meant positive personal gain. Another sad characteristic of Americans is how they seek to destroy American success stories. In Tesla, they have a world-beating company that has the capacity to disrupt the world's energy and automotive industries, and if they supported it, other such innovative companies would emerge rapidly - ensuring America's place as the world's leading economy. But instead they do their damndest to pull it down, relish in its difficulties and pillory its management.
Very sad... but soon, China will take over, and when that happens, maybe the Americans will look in the mirror and ask "why?"
treespace profile picture
I think you are grossly underestimating the performance of this company based on coming innovations that could launch it back into the low $900s.


Tesla will lose $1B in Q1, their track record of 17 years without a profit will stay intact.
Doubt it holds $600 this week, we will be in the $500s but not for long.
truwa profile picture
And then it will go to $100 or less in this year. Please short more TSLA. This kind of opportunity comes once in a lifetime.

Yes, please short more TSLA, so when the corona virus is over, and I've bought more TSLA in the lows, the short squeeze will be so so much more, thank you :)
truwa profile picture
#TroyTeslike on twitter : 105K produced, 98.5K delivered.
120K produced. 105K delivered is my guess.
120K produced. 80K delivered is my guess.
i like money profile picture
Nicely written article from a long term Tesla bull...I think you’re insane on your long term price target, but to each their own.
Andreas Hopf profile picture
"Be Ready For A Big Q1 Miss"

Will Tesla have to cut its dividend and stop share buy-backs?
craigimass profile picture
IF true self-driving or really close proves out within the next 2-3 years that's really a game changer. Uber and Robocars and things like that aside.....70 Million Americans are over 60. Our system sucks and there is no way to get around except for cars.
So, what cars are older people going to buy to feel safe...assuming they have the $$$ ?

Add to that the many other Tesla markets....they are effectively destroying most other Luxe car brands with the exception of Lexus. Then there is the Green market, the Gadget (tech) market and many others.

If a Dem. regime takes over the WH expect to see more tax credits for solar and for EVs...maybe not big, but perhaps some - especially for an American company.

Tesla has always been risky and, yes, I'm not backing up the truck at $700, but the fact is that no one knows about the true potential changes in the next couple of years.
blacky_ profile picture
400 USD coming (before summer 2020).
truwa profile picture
"Unplugged Performance Tesla Model 3 Is As Fast As McLaren F1 On Tsukuba Circuit".

Wow, just wow. $57K cost and supercar level performance. Unbelievable.
Just what the world has been waiting for. Not.
I really need the general public driving something that they can't begin to safely handle, on public streets with other cars, cyclists and pedestrians.
WOW! Just WOW! At LAST we have what we NEED!
Bull_rider beat me to it....do you know how many people can afford a $60,000 vehicle?
I can, but simply won’t out of principle...
In the real world, 1/200 people at best buy 60k vehicles and many of those are trucks, not sedans. Add in competition, not enough to go round for a company already valued 4x higher than Ford.
You’re sarcasm aside, Still not a reason to short the stock. There are plenty slightly less powerful cars around that are equally as dangerous.
71k deliveries?!! Okay, I agree IF that happens that stock will crash. But it is also true that IF a meteor hits earth tomorrow, many of us will die. Those are a lot of big IFs.

Give me a break!!
I have 150 shares purchased at $580 average. I am holding them for 5 to 10 years.
You are a very foolish person.
stickster profile picture
@SpaceXTeslaFan You will be able to add around 300 or so
earlyriser profile picture
With gas going to $1.50 soon, who wants an electric car?
Anyone who has ever driven one.
craigimass profile picture
That's like saying Utilities are going to build Oil fired generation plants now. They won't.
I suspect some folks will make big bucks betting on the price of oil....I'm staying away, but $25 oil will not last.
PV is already the cheapest way to generate election in most places - hydro is competitive but cannot be developed much more....

Your question reminds me exactly of "Who would buy Apple stock - now that Windows 95 came out?"....which I heard over and over again.

Or "Walmart has such a jump on Amazon why is Bezos even bothering to compete with them?".
doggydogworld profile picture
@craigimass - Apple came very close to BK in the years after Windows 95.
jsantmyer profile picture
This could be a great quarter for the accountants to load up on the expenses. That could make the remaining 3 quarters, easier to make a profit, assuming China can get control of the virus and a little bit of optimism creeps back into the market going forward.

We need to keep in mind that the 1st qtr of last year was a $2.90/share LOSS on the bottom line. Even with the author providing what may end up being a very pessimistic projection, the loss would be $.86/share less in 2020 versus 2019.
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