Tesla Inc’s (NASDAQ: TSLA) analyst-estimate-beating Q1 supply numbers have left GLJ Analysis’s Gordon Johnson lower than impressed.

The Tesla Analyst: Johnson maintained his Promote ranking on the Elon Musk-led firm’s inventory and valued the shares at $67 exiting 2022.

The Tesla Thesis: Johnson admitted that the automaker beat GLJ’s estimates by 13,000 vehicles because it delivered 184,800 automobiles within the first quarter of 2021. The analyst stated that GLJ had “incorrectly” lower their supply estimates from Tesla from 188,000 to 171,600 items.

Johnson stated in a observe that evaluating Q1 2021 with the identical interval in 2020 is “irrelevant” and the right comparability is somewhat with This autumn 2020. He stated that majority of Tesla analysts are both overreacting to Tesla’s Q1 supply numbers or misunderstanding them.

The GLJ analyst stated Tesla has a rising demand downside. Johnson highlighted the truth that the automaker was “barely” producing any vehicles in China in Q1 2020 and worth cuts of roughly $8,500 for Mannequin 3 Commonplace Vary and $24,100 for Mannequin Y Lengthy Vary had not but been made.

“Extra particularly, the ONLY quarter the place TSLA had absolutely lower the costs for its vehicles in China and had full manufacturing in China was 4Q20, the place the corporate offered 180.6K vehicles; so, the ONLY factor that issues for TSLA in 1Q21, and going ahead, in our view, is sequential development,” wrote Johnson.

As per the analyst, the rising volumes of two% in Q1 on a quarter-over-quarter foundation “shouldn’t be a superb factor.”

Johnson stated that Tesla’s development prospects in massive automobile markets world wide have peaked out and there’s “no extra low-hanging fruit.”

“This isn’t an organization with a manufacturing downside; this can be a firm with a DEMAND PROBLEM,” wrote Johnson.

The analyst lastly questioned the margins that Tesla enjoys on its varied automobiles and the way it impacts the corporate’s backside line. He assumed a median margin on a Mannequin 3/Y car to be almost $4,000. On Mannequin S/X, Johnson labored out the margin to be roughly $20,000.

Extrapolating these numbers, he identified that Tesla offered 16,900 fewer Mannequin S/X vehicles in Q1 2021 in contrast with the previous quarter, which implies it had $321.1 million much less in revenue. Johnson stated Tesla offered 211,300 extra Mannequin 3/Y vehicles within the interval, which implies $84.52 million extra in revenue.
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“So, net-net, the combination within the quarter, on vehicles offered alone, seems to be set to negatively affect TSLA’s bottom-line by -$236.580mn, which means, barring credit score gross sales, they are going to seemingly lose cash once more in 1Q21,” as per Johnson.

Lastly, as per Johnson whereas Tesla’s development potential has declined materially extra competitors from rivals akin to Ford Motor Firm (NYSE: F), Volkswagen AG (OTC: VWAGY), and Common Motors Firm (NYSE: GM) is predicted this yr.

The views are in distinction with these of Wedbush analyst Daniel Ives, who dubbed the Q1 deliveries report as a “drop the mic” second.

Loup Ventures’ Gene Munster too expressed a view that even when Tesla had missed road estimates on Q1 deliveries, it would not be a trigger for alarm.

Worth Motion: Tesla shares closed 0.93% decrease at $661.75 on Thursday.

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