Tesla (TSLA) Q2 Delivery Miss Highlights Two Concerning Themes - Barclays

Barclays analyst Brian Johnson said Tesla Motors (NASDAQ: TSLA) Q2 delivery miss suggests issues are deeper than they appear. He is not buying the company blaming in-transit vehicles for the shortfall from guidance.

Johnson said the miss highlighted two themes:

• Production issue: While in-transit vehicles played some role in the miss, they think lower-than-guided production also played a role, further reinforcing the firm's scepticism around whether Tesla can meet its lofty volume targets for Model 3.
• Lagging Model S demand: Perhaps more concerning to Johnson is the fall-off in Model S demand, which is hard to explain away by production problems. 2Q deliveries were down 21% sequentially and 18% y/y. This represents, in their view, lagging demand for an aging vehicle, and puts into context Tesla's decision to launch the lower-priced 60kWh version of the Model S (albeit one that has the full battery content of the 75 kWh version, yielding a drag to margins).

The analyst said the bigger question is what helps the "cult psychology" stock. Shares have essentially shrugging off the delivery miss as well as the on-going debate around Autopilot and the SCTY merger proposal, he notes.

Johnson would expect the stock to trade weakly as consensus drifts down off the delivery numbers (2Q consensus EPS on Friday was -32c, yet fell to -38c yesterday) - potentially setting up room for a 2Q EPS beat from ZEV credits.

With the gigafactory grand opening on July 29 (likely prior to the 2Q earnings release), they expect the narrative to shift to the renewable energy conglomerate story, perhaps leading to some announcement in the 2Q call around stationary storage projections.

The firm maintained an Underweight and price target of $165.00

For an analyst ratings summary and ratings history on Tesla Motors click here. For more ratings news on Tesla Motors click here.

Shares of Tesla Motors are down 0.63% today to $212.64.

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