Nasdaq 100 forecast: Tesla stock drops on big delivery miss

Key takeaways

• Tesla shares are slumping today after deliveries came in much lower than expected in the third quarter
• Miss is all the more significant considering analysts had already lowered their forecasts leading up to the update
• Tesla blames factory downtime, but the big miss will stoke fears about demand and whether more price cuts will be necessary
• Tesla reiterates goal to produce 1.8 million cars over the full year
• Q3 earnings estimates now at risk and will be downgraded ahead of financial results out later this month

Tesla deliveries suffer first fall in over a year

Tesla delivered 435,059 vehicles in the third quarter of 2023, which was well below the 456,772 forecast by Wall Street. The miss is all the dramatic considering Wall Street raced to cut estimates from over 473,000 last month and 460,000 just last week.

We can see that Tesla finally started to work through some of its existing inventory in the first quarter as deliveries outpaced production for the first time in six quarters. Still, there is a lot of inventory to work through following the buildup we have seen over the past year or so. That may raise questions as to why deliveries didn’t perform better despite the disruption to production.

Why did Tesla deliveries fall?

The fall in output in the third quarter is largely being blamed on factory downtime, including the adjustments that have been necessary to introduce the newly-revamped Model 3 and the Cybertruck, the latter of which is its first new vehicle to be launched in over three years! Still, it appears the Cybertruck continues to face delays (having originally been due out in 2021!) considering markets were hopeful that it would be launched before the end of September.

However, the sequential decline in deliveries – twinned with the news that it keeps producing more cars than it can sell – will stoke fears that demand is under pressure and heighten concerns that more price cuts will be needed to drive demand going forward. That will continue to weaken Tesla’s market-leading profitability levels, which it has said it is willing to sacrifice in order to keep deliveries growing.

The disruption to deliveries also raises the chance that Tesla misses its goal to sell at least 1.8 million vehicles this year, although the company said it is still confident of achieving this goal. That would represent annual growth of about 40% from the 1.3 million cars shifted in 2022.

What does this mean for Tesla Q3 earnings?

Tesla will release third quarter earnings on after markets close on Wednesday October 18.

Ultimately, the big miss in deliveries means its revenue and earnings estimates are now at risk and we will see analysts push their forecasts lower over the coming days and weeks to reflect this.

Where next for TSLA stock?

The update has, understandably, weighed on sentiment and Tesla shares opened 2% lower when markets opened today.

The 100-day moving average at $242 may provide some support but there is potential for the stock to sink lower before finding a floor. $240 should be seen as the immediate level of support but it could fall to as low $235 before the rising trendline that can be traced back to April comes into play.

The close we saw yesterday at $250 is now the immediate upside goal in order to set a new higher-high, which is also roughly in-line with the 50-day moving average.

Nasdaq 100 analysis: Where next?

Tesla is the sixth biggest member of the Nasdaq 100, although the index is still managing to gain ground in early trade today despite the update as other stocks push higher. The index’s first test will be to break above the 100-day moving average at 14,900 after failing to clear this hurdle yesterday. That would allow it to go on and close the gap created two weeks ago to put 15,000 back into sight.

The rising trendline and the support zone have intertwined around 14,500, suggesting this should be regarded as the immediate floor for the index, although the support zone does leave the door open to a low of 14,400.