It’s undoubtedly going to be a big week in the stock market, with a slew of economic data set to come on tap for investors. And for those in mega-cap tech stocks like Tesla (NASDAQ:TSLA), there are even more catalysts ahead. TSLA stock is up a whopping 7% in early afternoon trading ahead of a key report set to be released on July 2.
Tomorrow, Tesla will release its latest deliveries numbers. Wall Street analysts vary on their specific targets for Tesla. But the reality is that the company is expected to drop significantly on a year-over-year (YOY) basis. For some growth investors, that’s an indication this is a growth stock without growth that’s worth avoiding right now.
But for other investors, this lowered bar could indicate a buying opportunity, particularly if Tesla surprises to the upside. Let’s dive into what specific analysts are projecting and why TSLA stock is flying today.
TSLA Stock Soars Ahead of Key Deliveries Report
Having access to real-time data — and the ability to adjust models on the fly according to such data — is a great thing for investors. The fact that it will only take one business day for the Tesla team to determine how many vehicles the company sold this past quarter is impressive and will certainly factor into how investors value the company.
Despite Musk’s consistent rhetoric around Tesla being an artificial intelligence (AI) company, the reality is that the vast majority of its earnings and cash flows are derived from its electric vehicle (EV) sales. Accordingly, having a glimpse into where deliveries came this past quarter will allow analysts to update their earnings multiples on the company and better project where forward earnings will come in.
Barclays and UBS both estimate significant reductions in deliveries, penciling in 415,000 to 420,000 while Guggenheim estimates the company will report 419,000 deliveries. RBC Capital Markets analyst Tom Narayan is even more bearish, suggesting Tesla will likely report a number closer to 410,000 units.
These numbers are notable declines from last year’s estimate of around 533,000 sales. Tesla has noted stark declines in its European market and Chinese headwinds prevail with increased competition and pricing pressure in that market.
Today’s price action may certainly be the result of investors taking an overly bullish perspective on these declines. If Tesla’s recent underperformance is temporary and more accommodative monetary policy decisions around the world spur better demand dynamics moving forward, perhaps the company can return to growth. But a 23% decline in projected sales is steep — and one that investors should view in a cautious way right now. That’s my take, at least.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
