Key Points
- Tesla’s delivery numbers are declining, missing both internal targets and Wall Street estimates.
- Consensus forecasts remain overly optimistic, risking a steady wave of downward revisions.
- Tesla is losing brand momentum, and the narrative-driven goodwill around the CEO is showing cracks.
- A simple valuation reset using the Gordon Growth Model suggests a potential 35%–40% downside from current levels—even assuming generous growth rates.
Tesla: A Car Company with Vibes
As we've written before, Tesla’s valuation sits at the intersection of auto industry fundamentals and speculative sentiment.
On the fundamentals:
- Tesla is falling behind competitors in cost structure and innovation.
- Its brand is weakening, especially in markets like China and Europe, where EV competition is fierce and gaining.
On the sentiment side:
- Investor goodwill toward Elon Musk is fading, as attention splits across multiple ventures and key projects stall.
The once-exciting autonomy narrative now lags behind competitors like Waymo, which have established more commercial traction.
Deliveries Are Down — And So Is the Story
Tesla reported 336,681 deliveries in Q1 2024, down 13.0% year-over-year and nearly 11% below analyst expectations (377,000). This isn't a one-off. The company’s 12-month trailing delivery volume peaked in December 2023 and has since plateaued, now declining at a 2.5% annualized rate.
The chart shows a concerning divergence: while production continues to rise, deliveries are now clearly lagging. This suggests increasing inventory, declining demand, or both—none of which support Tesla’s premium valuation.
Street Forecasts Are Overly Optimistic
Despite recent misses, sell-side forecasts remain high:
- Q2–Q4 2024 delivery estimates: 456k, 497k, and 544k
- Yet Tesla has never delivered over 500k in a single quarter
Musk himself stated in October 2024 that the company expects 2.1–2.3 million deliveries in 2025. To reach even the low end of that range, Tesla would need to hit ~555k per quarter—a pace it has never achieved.
Why This Matters: Estimate Cuts = Price Cuts
One of the most consistent bearish catalysts in equity markets is a drip of downward revisions to earnings and target prices. Given the wide gap between trend data and Street forecasts, Tesla may be heading toward an extended period of estimate cuts—often a slow but steady drag on stock price performance.
Valuation Reality Check
Tesla is still trading at a valuation that implies 35%–40% EPS growth, a figure that seems increasingly detached from its operating performance. Even if we adjust expectations to a still-optimistic 20%–25% EPS CAGR, the stock looks expensive.
Using a Gordon Growth Model (with a 12% cost of equity, 4.5% risk-free rate), we estimate a 35%–40% downside from current levels under these revised assumptions.
Final Thought
Tesla might still have long-term potential, but right now, the numbers are going the wrong way while the story gets harder to believe. Unless delivery trends reverse quickly, the stock may face a long overdue reality check.
