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Fall in Model 3 Delivery & High Expenses Affect Tesla (TSLA)

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We issued an updated research report on Tesla, Inc. (TSLA - Free Report) on May 6.

In first-quarter 2019, the company’s earnings and revenues missed the Zacks Consensus Estimate. However, on a year-over-year basis, earnings and revenues improved.

In first-quarter 2019, Tesla’s vehicle production and delivery numbers witnessed sequential declines of 10.9% and 31%, respectively. It managed to produce about 77,100 vehicles. This included 62,950 Model 3, and 14,150 Model S and X. Out of the total delivered figure of 63,000 units, Tesla’s Model 3 accounted for 50,900 while Model S and X were 12,100. During the quarter, this electric automaker struggled with Model 3 deliveries to Europe and China, owing to longer transit time.

In addition to this, some other factors affecting Tesla’s results are high research and development (R&D), and selling, general and administrative (SG&A) expenses. In fact, the EV manufacturer is investing heavily in increasing production capacity, the development of Model X and Model 3, the Gigafactory construction, and expansion of sales, services and Supercharger infrastructure. This escalated R&D and SG&A expenses.

However, Tesla occupied a substantial market share in the global electric cars market segment. The company is witnessing growing sales on the back of strong performance and impressive design of products.

In the past three months, Tesla stock has declined17% against 1.6% increase recorded by the industry it belongs to.


 

Tesla currently has a Zacks Rank #5 (Strong Sell). A few better-ranked stocks in the auto space are AB Volvo (VLVLY - Free Report) , PACCAR, Inc. (PCAR - Free Report) , and Geely Automobile Holdings Ltd. (GELYY - Free Report) . While Volvo currently sports a Zacks Rank #1 (Strong Buy), PACCAR and Geely carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Volvo has an expected long-term growth rate of 5%. Over the past three months, shares of the company have gained 9.4%.

PACCAR has an expected long-term growth rate of 8.4%. Over the past three months, shares of the company have gained 5.3%.

Geely Automobile has an expected long-term growth rate of 7%. Share price of the company has increased 14.8% in the past three months.

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