Tesla's sales numbers are around the corner. Does it look good for the EV maker?

RBC Capital's Tom Narayan forecasts Tesla's Q2 deliveries at 366,000 EVs, notably below the FactSet consensus of 390,000, indicating potential ongoing sales challenges ahead of next week's official report. This estimate, derived from regional registration data, projects a significant 16% quarter-over-quarter decline in Europe, partly attributed to CEO Elon Musk's political controversies, alongside a slight US dip and China growth. The subdued outlook follows a disappointing Q1 and contributes to Tesla's challenging year, with shares down 20% year-to-date compared to the S&P 500's gains.

Analysis

Anticipation surrounding Tesla's upcoming second-quarter delivery report is marked by significant pessimism, as a recent analyst forecast signals potential for another weak performance. RBC Capital projects deliveries of 366,000 vehicles, a figure substantially below the FactSet consensus of 390,000 and a sharp decline from the 444,000 units reported in the same quarter of the previous year. This bearish outlook, which follows a major first-quarter earnings miss, is based on an analysis of regional registration data. The model indicates considerable weakness in Europe with a 16% quarter-over-quarter sales decline, partially attributed to the CEO's political controversies, and a 2.2% QoQ drop in the U.S. These declines are only partially offset by a projected 11% QoQ sales increase in China. The combination of a challenging macro environment and potential demand delays ahead of new affordable models contributes to this subdued forecast. The market has already priced in significant concern, with Tesla's stock down 20% year-to-date, starkly underperforming the S&P 500's approximate 4% gain.

Key Decisions for Investors

• Investors should closely monitor the official Q2 delivery numbers, as a result below the 390,000-unit consensus could confirm the bearish trend and trigger further negative sentiment.
• Pay close attention to any management commentary on regional performance during the subsequent earnings call, particularly regarding the demand situation in Europe and the sustainability of growth in China.
• Given the stock's 20% year-to-date decline, consider whether current headwinds are fully priced in or if a confirmation of weak deliveries could catalyze another downward move.
• Evaluate whether the sales weakness is a temporary issue related to demand deferral for new models, as the article suggests, or a more fundamental erosion of market share and brand value.