Why Tesla stock slammed on the brakes Monday

Lower-than-expected vehicle deliveries gave some investors pause.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Tesla (NASDAQ: TSLA) skidded off the road Monday, falling by as much as 8.8%. As of market close, the stock was still down by 8.61%.

The catalyst that sent the electric vehicle (EV) maker plunging was quarterly vehicle deliveries that fell short of expectations.

So what

In a press release that dropped Sunday, Tesla revealed its third-quarter production and delivery numbers, and while the growth was robust, investors wanted more.

The company delivered 343,800 vehicles over the past three months, surging past the 255,000 units it shipped in the second quarter, but well below analysts' expectations, which came in at 364,660. Furthermore, the company reported production of 365,923, recovering from the pandemic-restricted 258,580 number in the second quarter.

Now what

It's important to take a step back and put these results in context. The shortfall in deliveries was the result of a number of vehicles in transit at the end of the quarter. In its press release, Tesla addressed the issue, saying, "Historically, our delivery volumes have skewed toward the end of each quarter ... [but] as our production volumes continue to grow, it is becoming increasingly challenging to secure vehicle transportation capacity."

Furthermore, during the month of July, Tesla's production facility in Shanghai was shuttered to allow the company to make upgrades to the factory. This no doubt affected the company's overall delivery numbers, even as its China output has since rebounded.

Finally, so far this year, Tesla has produced nearly 930,000 EVs and delivered more than 908,000 -- with nearly all the difference being cars that were out for delivery at the end of the third quarter. Tesla is on track to produce at least 1.3 million vehicles this year, which would represent growth of 39% compared to 2021.

That figure could end up being conservative, as the company is aiming to produce as many as 500,000 cars in the fourth quarter. If Tesla is able to reach that ambitious goal, its production would jump nearly 54% year over year to more than 1.4 million vehicles -- an impressive accomplishment indeed.

For investors focused on the big picture, Tesla stock is a buy.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Danny Vena has positions in Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

A father helps his son look through binoculars during a family holiday or day out in the city.
International Stock News

Why emerging markets could be a winner after US-Iran peace deal: Expert

Here's why now could be the time to target emerging markets.

Read more »

the australian flag lies alongside the united states flag on a flat surface.
Economy

US chip stocks were smashed overnight. So why are ASX tech shares rising?

ASX tech shares are bouncing as US chip stocks tumble.

Read more »

the australian flag lies alongside the united states flag on a flat surface.
International Stock News

3 easy ways to buy Nvidia stock on the ASX

It has never been easier to own Nvidia shares.

Read more »

Three small children reach up to hold a toy rocket high above their heads in a green field with a blue sky above them.
International Stock News

SpaceX shares are rocketing – how can Aussie investors get exposure?

Should investors buy into the hype?

Read more »

A woman stacks smooth round stones into a pile by a lake.
International Stock News

Gina Rinehart just made US$425 million from SpaceX shares in 2 days

Gina Rinehart’s US$1 billion SpaceX bet is already paying off.

Read more »

Astronaut floats in space looking down on Earth.
International Stock News

Elon Musk is now the world's first trillionaire. Should you buy SpaceX shares?

Elon Musk’s SpaceX delivered a huge first-day gain for investors.

Read more »

A rocket blasts off into space with planet behind it.
International Stock News

BlackRock just ordered US$5 billion of SpaceX shares. Should you follow?

BlackRock’s huge SpaceX order adds more heat to the IPO.

Read more »

Codan share price A dismayed kid dressed as a scientist stands with his back to a rocket crashed into the ground
International Stock News

The SpaceX IPO will make lots of people rich. Just not you

SpaceX is about to float, but could it sink early investors?

Read more »