10/3/2022: Tesla Stock Falls 8.6%

They missed Q3 delivery numbers badly.

Tesla stock dropped 8.6% on Monday while the stock market surged. Tesla’s vehicle deliveries for the quarter ending 9/30 fell short of analysts' forecasts. The electric-vehicle maker delivered a record 343,830 vehicles to customers in the three months to September. But the Wall Street forecasts are expecting deliveries to be between 358,000 and 371,000 vehicles. There was also a larger-than-usual gap between production and delivery numbers. The company produced 365,923 vehicles in the third quarter. In other words, they didn’t sell out all their cars like the previous quarters.

In late August, I took delivery of a new model X, which was backlogged for a long time and I didn’t expect it to be available until January 2023. But I was suddenly able to get the delivery immediately if I was willing to upgrade to the more pricey Plaid version. I took the bait but it’s indicative of the waning demand of Teslas. As usual, there were some cosmetic problems with my new X and the issues are still not fully addressed. For a $130K vehicle, it’s kind of insane that I have to deal with all the problems. The driving experience is superb if I could overlook the issues such as the bruised leather or the misfit window shield. Their service work is also sloppy as they made the car super dirty after my first repair appointment and there’s not a phone number I could call to complain about it. I believe Tesla still has the lead for electric cars but with all the hardware and customer service issues, I wonder how many customers are willing to put up with this.

With the rising interest rates, it’s inevitable the demand for new cars will slow down. I have always thought Tesla stock is overvalued. Even with today’s drop, TSLA‘s Enterprise Value/EBITA is 50+, which is insanely high. They are going to have their earnings in mid-October and the Elon vs. Twitter lawsuit will also happen in the same week. It’s quite likely their stock will fall further. In my opinion, TSLA 0.00 is the ultimate meme stock. If TSLA starts to trade at a reasonable price level, that will probably be the market bottom many investors are waiting for.