Tesla's Q2 2024 Projections: Barclays Warns Investors to Brace for Impact
As Q2 2024 approaches its end, all eyes are on Tesla (TSLA/" target="_blank">NASDAQ:TSLA), the darling of the electric vehicle world. However, Barclays has cast a cautious shadow over Tesla's performance this quarter. Maintaining an 'Equal-Weight' rating with a target price of $180 per share, Barclays analysts have flagged potential disappointments that might lurk around the corner for TSLA stock enthusiasts.
Delivery Estimates vs. Expectations
Barclays projects that Tesla will deliver around 415,000 vehicles in Q2 2024. While that figure is an improvement over the 386,810 cars delivered in Q1, it still falls short of the market's consensus estimate of 444,000 units. Such a discrepancy is noteworthy, given the high expectations surrounding Tesla's delivery capabilities. The analysts noted, 'We estimate 2Q deliveries of ~415k units, which is below the current consensus of 444k,' adding that their estimate aligns with more muted buyside expectations.
TSLA 2Q deliveries to miss WS consensus, says Barclays. Source: The Fly pic.twitter.com/P5j5GS9uPq
— Gary Black (@garyblack00) June 21, 2024
Regional Sales and Production Challenges
Barclays' caution stems from several regional market challenges. The firm highlighted subpar sales in Europe and modest production increases in China. These factors are crucial as they indicate potential regional weaknesses that could impact Tesla's overall performance. Furthermore, Barclays pointed out Tesla's ongoing inventory issues, with an estimated production of around 420,000 units implying further inventory buildup.
The analysts stated, 'Production ~420k units, implying further inventory build.' This buildup is expected to increase Tesla's global inventory by 5,000 units, pushing the total to approximately 150,000 vehicles. Such inventory concerns are worrisome, as they suggest that demand may not be keeping up with production.
Historical Context and Future Implications
Tesla's Q1 2024 performance was already below expectations, with the company delivering fewer than 387,000 vehicles compared to estimates ranging from 415,000 to 430,000 units. Should Tesla miss its Q2 targets, this could exacerbate challenges for the electric vehicle maker. Barclays analysts cautioned that '2Q24 margins may see new trough; further negative EPS revisions ahead.'
Moreover, Barclays anticipates that Tesla might face continued negative revisions on its 2024 and 2025 estimates. Such projections raise concerns about Tesla's ability to meet its ambitious growth and profitability goals in the coming years.
Investment Outlook
For investors, Barclays' report serves as a critical checkpoint. While Tesla has been a star performer in the electric vehicle market, this cautionary outlook underlines that even the most promising stocks can face hurdles. The combination of lower-than-expected deliveries, regional sales challenges, and inventory builds presents a complex scenario for both Tesla and its investors.
Thus, as Q2 2024 wraps up, stakeholders would do well to closely monitor Tesla's actual delivery numbers and any subsequent market and analyst reactions. For those considering new positions or reevaluating current ones in TSLA stock, Barclays' cautious stance offers valuable insights that should not be overlooked.
For more news and updates, feel free to send tips to simon@teslarati.com.