Tesla announced on Wednesday after the close that it had delivered 97,000 vehicles in the third quarter of 2019, falling shy of consensus Wall Street expectations of 99,000. In a note to employees that was leaked last week, CEO Elon Musk wrote that Tesla had "a shot" at delivering 100,000 vehicles in the quarter.
Tesla shares were down close to 8% on Thursday morning to $224.35.
JMP analyst Joseph Osha downgraded Tesla to market perform from market outperform. Osha noted the delivery number came in below his expectations, but noted that "more importantly, the delivery data show low single-digit sequential unit growth, and we know of no operational issues that could have prevented TSLA from delivering more vehicles if demand were available."
Osha added that the delivery results marked the first time since he began covering the stock that he considered it likely that Tesla demand could be declining. JMP does not publish a price target.
Osha said that he's more bullish than many analysts and, unlike others, he isn't worried about Tesla's liquidity position and highly leveraged capital structure. Instead, the demand questions coupled with the fact that Tesla is "a stock that we think appears fairly valued" at Wednesday's closing price of $243 warrants a downgrade.
For the rest of 2019 and 2020, Osha is slightly more bearish now. Along with several other analysts, Osha now sees it as far less likely that Tesla will hit the low end of its 2019 delivery guidance, which ranges from 360,000 cars to 400,000. Tesla will have to deliver 105,000 cars in the fourth quarter to hit the low end. Osha brought his 2019 delivery estimate down slightly to 358,000, just above Wall Street's consensus estimate coming into the results of 357,000.
For 2020, Osha lowered his delivery estimate by 59,000 vehicles and his revenue estimate to $29.08 billion from $31.8 billion. He also reduced his EBITDA estimate to $3.57 billion from $4.24 billion.
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