Elon Musk Says Tesla Is Lagging In Vehicle Deliveries

Elon Musk Says Tesla Is Lagging In Vehicle Deliveries
May 31, 2019

 

In his internal memo to employees, the second one in the past two weeks, Tesla Inc.’s (NASDQ: TSLA) CEO Elon Musk has opined that the company is lagging in deliveries but continues to see robust demand for its models. Furthermore, Musk has stated that proper planning and execution will enable the company to achieve record deliveries in the second quarter. The internal memo, publicized by major news agencies, sparked a selloff causing the stock to lose $1.64 or 0.86% to finish the trading day at $188.22.  So far, in 2019, the stock of Tesla has lost more than 30% of its value. Notably, in January, the stock reached a high of $340 per share.

Palo Alto-based electric automaker Tesla Inc. has once again made headlines for the wrong reasons. The company’s CEO has raised concerns about the sloppiness in deliveries.

In his email to employees, Elon Musk has stated that the electric-car maker has “a lot of vehicle deliveries to catch up to in order to have a successful quarter.”

Reports indicate that Musk disclosed details related to conference calls with teams in the US and overseas to determine what should be done to boost the delivery rate.

Musk also believes that proper execution will enable Tesla to create a record in second-quarter deliveries. Musk said, “Per my earlier email, if we execute well, Q2 will be an all-time record for Tesla vehicle deliveries and an awesome victory!!”

In fourth-quarter of 2018, Tesla broke their record by delivering 90,700 vehicles to its clients.

Notably, last week’s email from Musk to employees disclosed that the company was anticipating record vehicle deliveries in the second quarter after missing analysts’ expectations for the first and fourth quarter. Despite the company’s expectations, investors are worried about long-term demand for the company’s cars as more prominent automakers are entering the arena. Tesla manufactured 9,455 fewer vehicles in Q1 compared with Q4, reflecting an approximate 11% decrease.

In the first quarter, production of Model S and Model X dropped by roughly 44% on a q-o-q basis. A 50% cut in the federal tax credit at the beginning of 2019 is also a cause of worry for investors. Regarding the drop in first-quarter deliveries, Tesla had clarified that many of the vehicles shipped to Europe and China were yet to reach their destination and so the company would include their figures in the second-quarter deliveries.

Regarding the slowdown in deliveries, Tesla issued the following statement last month: “Due to a massive increase in deliveries in Europe and China, which at times exceeded 5x that of prior peak delivery levels, and many challenges encountered for the first time, we had only delivered half of the entire quarter’s numbers by March 21, ten days before the end of the quarter.”

Tesla also clarified the reason behind shifting of vehicle deliveries to the second quarter. “This caused a large number of vehicle deliveries to shift to the second quarter. At the end of the first quarter, approximately 10,600 vehicles were in transit to customers globally.”

The anticipated competition and inability to achieve delivery forecasts was the prime reason for Morgan Stanley to issue a price target of merely $10 in a “bear case” scenario.

Issues related to vehicle deliveries are anticipated to keep the stock weak in the near-term. The stock is almost experiencing a free fall. As the saying goes, “never catch a falling knife,” – it is better to avoid having long positions in the stock at this point.

Technically, the stock is trading below its 50-day moving average. Furthermore, the MACD indicator is moving deeper into the negative zone. As a result, we can expect the stock to remain bearish in the short-term.

TSL - technical analysis - 31st May 2019

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.

Ian Maguire

Ian Maguire

Ian is our resident contributor to the latest going ons in the cryptomarket, keeping up to date with the latest icos and coins


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