Why This Tesla Investor Expects 3Q Deliveries To Undershoot Expectations: 'We Remain Bullish But Wary'
Benzinga · 09/15 10:06

Tesla, Inc. (NASDAQ:TSLA) shares have been on a rebound since the start of the week, but the near term could be rocky, according to comments from Future Fund Managing Partner Gary Black.

Q3 Deliveries To Come In Light? There is a noticeable disconnect between the earnings per share estimates for Tesla that have continued to fall and the overwhelming bullishness about the full-self driving software and manufacturing advantages, said Black in a post on X, formerly Twitter.

The fund manager said that the negative rerating of EPS estimates is a short-term issue, with traders factoring in a drop in third-quarter volume estimates and further erosion in auto gross margin, excluding regulatory credit. He expects third-quarter deliveries to come in at 445,000 units compared to the consensus estimate of 462,000 units, with the variance likely due to China not having Model-3s to deliver or export to Europe over the last few weeks of the quarter.

He added that this will likely reverse in the fourth quarter once M-3 refresh deliveries start.

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Margin Worry Lingers: The high level of discounting that continues on existing Model Y inventories is another cause of concern, Black said.

“While I apply this discounting only to 3Q auto gross margins, others assume that prices will be cut again on the M-Y configurator, which flows through earnings models as permanent reductions,” he said.

Black’s estimate of auto gross margin, excluding regulatory credit, is as follows:

FSD Uncertainty: “The aspirational thinking that only $TSLA can get to generalized L4/L5 autonomy is widespread among bulls and may be true, but only if TSLA FSD can get a 99.99% intervention free experience with vision only and neural nets,” Black said.

With many legacy OEMs now seeing weak demand for their EVs for the first time and Tesla management trying to steer third-quarter deliveries and gross margin estimates lower, there is sufficient uncertainty to be cautious even as the UAW prepares to strike against the big 3, the fund manager said.

The strike would boost Tesla sales if it lasts for more than a couple of weeks, he said.

“We remain bullish but wary,” Black said.

In premarket trading, Tesla stock rose 0.34% to $276.97, according to Benzinga Pro data.

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