The electric-vehicle maker is set to report its numbers after the closing bell on Thursday or Friday, and Wall Street analysts are warning they probably won’t be pretty.
“We believe Tesla, like every other auto manufacturer, is seeing demand softness globally over the last month as consumers remain in a virtual lockdown with health and food/essentials now the priority over a Model 3 purchase,” Wedbush analyst Dan Ives wrote in a recent note to clients.
He expects just 82,000 deliveries and says Wall Street’s consensus projection of 97,330 units doesn't reflect the pandemic's virtual shutdown of the U.S. economy.
The highly contagious virus has forced governments around the world to issue “stay-at-home” orders, leading to the closure of non-essential businesses, including auto dealers and production plants. Through Wednesday, Tesla shares fell 5.67 percent from Jan. 21, the day the virus was first reported in the U.S.
The electric-vehicle maker’s Fremont, California, production facility was temporarily shuttered on March 23, and it's expected to remain out of service for at least another month.
Morgan Stanley analyst Adam Jonas, who has an “in-line” rating on the shares and a $440 price target, sees Tesla’s first-quarter deliveries coming in at less than 80,000 and says many investors are prepared for a number below 70,000.
While Jonas expects full-year 2020 deliveries to total 420,000, leading to a cash burn of $800 million, his bear case is a 24 percent year-over-year drop to 320,000 units.
“A plausible bear-case from severe disruption of deliveries from near ‘stop sale’ conditions in the U.S. and Europe could take this figure towards $3 billion of burn (roughly $2 billion from lost earnings and $1 billion from working capital absorption),” he wrote.
Ives, who has a neutral rating on the stock and a $425 price target, believes hitting the company's goal of 500,000 or more deliveries in fiscal 2020 is a “virtual impossibility” and expects a range of 400,000 to 425,000.
“The global demand environment has changed dramatically in a matter of weeks for Tesla (and every other company) globally, which will be clearly be reflected in the company's updated outlook,” Ives wrote. “However, let's be clear: If any company can navigate production hurdles and limited capacity, it's Musk and Tesla, looking ahead, which the bulls are betting on to navigate this unprecedented pandemic.”