Tesla shares fall in pre-market trading as Elon Musk’s firm suffers huge quarterly drop in car deliveries
Tesla’s share price looks set for a significant fall when the Nasdaq opens this afternoon, after the electric car giant told investors its car deliveries have suffered a record quarterly drop.
Shares declined almost eight per cent in pre-market trading to $269.77 from yesterday’s close of $291.81 after the overnight update.
Read more: Elon Musk uses Twitter wisely, new Tesla chair says
The manufacturer reported 63,000 deliveries from January to March, down almost a third compared to the 90,966 it delivered in the fourth quarter of 2018.
Analysts had expected it to deliver around 76,000 cars.
But Tesla did commit to its full-year guidance of delivering between 360,000 and 400,000 vehicles in 2019.
It added that 10,600 cars were on their way to customers down to strong demand in China and Europe towards the end of the quarter.
The deliveries comprised 50,900 Model 3 electric cars and 12,100 Model S and Model X cars.
Dan Ives, an analyst at Wedbush Securities, told Bloomberg the quarter was better than some investors were anticipating.
“The Street was expecting an apocalyptic quarter and Model 3 deliveries were better than feared by many,” he said.
Read more: Elon Musk's lawyers call SEC contempt order 'retaliation' and 'censorship'
Elon Musk is set to face the SEC in an ongoing dispute over his tweets (Source: Getty)
That sentiment was echoed by Daniel Ives, managing director at Equity Research, who told CNN that “clearly soft” sales were made up for with Model 3 delivery numbers that “were better than feared”.
He said the low number "represents an 'air pocket' quarter in our opinion."
CNN pointed to the US’s halving of a $7,500 tax credit cut on Tesla vehicles, while the push of cars to China and Europe has been a fresh logistical challenge for the firm.
Tesla said yesterday that it experienced “many challenges” with a “massive increase” in shipments overseas.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said that while lower deliveries were predicted, market watchers had hoped for better Model X and S sales figures.
“Our concern is that demand for Tesla’s premium models has been permanently affected by the cut in subsidies in the US and that sales are being potentially cannibalised by the cheaper Model 3,” he added.
“With the $35,000 Model 3 variant only just hitting the market, the potential for Tesla to undercut its own products is only growing.”
He warned such lower prices and lower margins could have “serious consequences” for revenues and profit.
Tesla’s strategy appears mired in confusion, the analyst added, pointing to the company’s move to cut most of its stores before making a very public U-turn just days later.
Read more: Regulator accuses Elon Musk of misleading investors with new Tesla tweet
Musk, who is involved in a showdown with the Securities and Exchange Commission over his tweets, announced the move in a bid to make its cars more affordable.
But just over a week later Tesla scaled the plan back, opting to hike prices of its more expensive models instead.
“With Musk due in court to face the SEC imminently, Tesla remains one of the most absorbing companies we cover, and one which for good or ill, never ceases to surprise,” Hyett concluded.