Tesla's Latest Deliveries Report Exceeded Expectations. TSLA Stock Is Falling Anyway.

Billionaire Elon Musk’s electric vehicle giant Tesla (TSLA) ended lower on Thursday even though its second-quarter deliveries came in handily above Street estimates. The company delivered 480,126 vehicles in total, a 25% year-over-year increase that crushed analysts’ consensus estimate of about 406,000 units. 

Including today’s decline, Tesla stock is down more than 10% versus the start of this year.

Why Did Tesla Stock Slip on Thursday?

TSLA shares sold off on July 2 primarily because of underlying margin concerns. While the 480,000 delivery number is a record for the second quarter, it was actually heavily engineered. 

Tesla achieved these numbers through aggressive discounting, financing incentives, and by rolling out lower-cost variants of the Model 3 and Model Y.

Because deliveries outpaced actual production (451,758 units) by over 28,000 vehicles, the electric vehicle maker successfully drew down its backlogged inventory. However, clearing out old stock via heavy promotions means average selling prices (ASPs) took a hit. 

Investors fear that TSLA's full earnings on July 22 will reveal a big blow to automotive gross margin.

Simply put, the market is staging a classic “sell the news” reaction because shareholders are now demanding proof of profitability over raw volume. 

Oppenheimer Recommends Caution on TSLA Shares

Compounding the caution, Oppenheimer’s senior analyst Colin Rusch maintained a “Perform” rating on Tesla shares today. 

According to Rusch, while automotive volumes handily outperformed expectations in Q2, the firm’s energy storage business slightly missed some estimates due to seasonal dynamics. 

The investment firm remained on the sidelines, demanding clear proof of expanding automotive gross margins before upgrading its valuation model. 

Investors should also note that despite year-to-date underperformance, TSLA is going for a forward price-to-earnings (P/E) ratio of more than 350x currently, which makes it expensive by any stretch of the imagination. 

Wall Street Remains Bullish on Tesla

On the flip side, other Wall Street analysts actually disagree with Rusch’s cautious view on TSLA stock. 

According to Barchart, the consensus rating on Tesla sits at “Moderate Buy,” with price targets as high as $600 indicating potential upside of more than 50% from here.