Tesla Motors, Inc. (NASDAQ: TSLA), Ford Motor Company (NYSE: F) – Why Tesla's Q1 shipments aren't enough to impress long-term bear Gordon Johnson
By Joe Watson On Apr 5, 2021
Tesla Inc's (NASDAQ: TSLA) Analyst estimated Q1 shipments were less than impressive to Gordon Johnson of GLJ Research.
The Tesla Analyst: Johnson maintained his sell rating on the shares of the Elon Musk-led company, valuing the shares at $ 67 as of 2022.
The Tesla thesis: Johnson admitted the automaker beat GLJ's estimates by 13,000 cars when it delivered 184,800 vehicles in the first quarter of 2021. The analyst said GLJ had "wrongly" lowered its Tesla shipments estimate from 188,000 to 171,600 units.
Johnson said in a note that comparing the first quarter of 2021 to the same period in 2020 is "irrelevant" and that the correct comparison is more like the fourth quarter of 2020. He said the majority of Tesla analysts are either overreacting or misunderstanding Tesla's Q1 delivery numbers.
The GLJ analyst said Tesla has a growing demand problem. Johnson highlighted the fact that the automaker produced "barely" cars in China in the first quarter of 2020 and price cuts of approximately $ 8,500 for the Model 3 Standard Range and $ 24,100 for the Model Y Long Range have not yet been made.
"In particular, the ONLY quarter that TSLA completely cut prices on its cars in China and expanded production in China to the full in Q4 20, when the company sold 180.6,000 cars. The ONLY thing that matters to TSLA in Q1 21 and we believe will be sequential growth going forward, "Johnson wrote.
According to the analyst, the volume growth of 2% in the first quarter compared to the previous quarter is "not a good thing".
Johnson said Tesla's growth prospects have peaked in major auto markets around the world and "there are no more low hanging fruits".
"This is not a company with a production problem. This is a company with a DEMAND PROBLEM, "Johnson wrote.
The analyst eventually questioned the margins Tesla has on its various vehicles and how that affects the company's bottom line. He estimated an average margin for a Model 3 / Y vehicle of nearly $ 4,000. Johnson calculated a margin of around $ 20,000 for the S / X model.
Extrapolating those numbers, he pointed out that Tesla sold 16,900 fewer S / X vehicles in the first quarter of 2021 than in the previous quarter, meaning profits were $ 321.1 million less. According to Johnson, Tesla sold 211,300 additional 3 / Y models during the reporting period, representing a profit of $ 84.52 million.
See also: Tesla's $ 1.5 billion Bitcoin investment "a sign of desperation" by Elon Musk, analyst says
"So net-to-net quarterly mix for cars sold alone is likely to have a negative impact on TSLA's bottom line – $ 236.580 million, which means that apart from loan sales, they are likely to lose money again in Q1 21," said it in the Johnson report.
According to Johnson, Tesla's growth potential has declined significantly as competition from competitors such as Ford Motor Company (NYSE: F), Volkswagen AG (OTC: VWAGY) and General Motors Company (NYSE: GM) is expected this year.
The views contrast with those of Wedbush analyst Daniel Ives, who called the Q1 delivery report a "drop the mic" moment.
Loup Ventures' Gene Munster also said that even if Tesla had missed its first-quarter street estimates for deliveries, Tesla would give no cause for concern.
Price action: Tesla stock closed 0.93% on Thursday at $ 661.75.
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