Tesla Stock Down 4% Despite Breaking Delivery Record In Q3

Tesla Inc. failed to deliver the 100,000 electric vehicles (EVs) in the third quarter its CEO, Elon Musk, last week said might be possible and paid the price for that disappointing miss on Wall Street.

The company is estimated to have delivered some 97,000 EVs in Q3, which was two percent higher than the 95,200 deliveries in Q2 and a huge 54 percent improvement from the 63,000 deliveries in Q1.

Tesla said it produced 96,155 EVs in Q3, and described its Q3 deliveries as "slightly conservative," hinting this number might still increase.

"Our delivery count should be viewed as slightly conservative, as we only count a car as delivered if it is transferred to the customer and all paperwork is correct," said Tesla in a statement. "Final numbers could vary by up to 0.5% or more."

On the other hand, analysts expected Tesla to deliver 99,000 EVs in Q3, including 80,200 Model 3s, according to FactSet. Tesla had earlier told shareholders to expect deliveries for all of 2019 to range from 360,000 to 400,000 vehicles, which translates into a 45 percent to 65 percent increase from 2018.

The disappointing Q3 deliveries led Tesla's stock to lose a scant 0.64 percent to finish regular trrading at $243.13 after opening at $243.29. The loss, however, ballooned after hours to 4.1 percent and causing the stock to plunge to $233.28.

Wall Street's attention and that of other analysts elsewhere, now turns to Tesla's financial results in Q3 to be released later this month.

A looming perception among analysts is that a revenue drop is in the cards. If Tesla's revenue does decline, this will be the company's first since 2012.

A revenue reduction will make it tougher for Tesla to return to profitability despite painful cost-cutting measures that continue to this day.

"Even if it meets consensus on deliveries, the question into third quarter earnings will be around margins, plus how the stock reacts with likely the first negative year-over-year revenue growth quarter since 2012," said Dan Levy, an analyst at Credit Suisse.

In an email to Tesla employees revealed last week, Musk said the delivery record was within reach.

“We have a shot at achieving our first 100,000 vehicle delivery quarter, which is an incredibly exciting milestone for our company!” wrote Musk.

Musk also said demand for Tesla EVs is trending higher than the targeted 100,000 deliveries. Apart from deliveries, orders for Tesla EVs are also rising, said Musk. He said net orders are “tracking to reach about 110,000” for Q3, which will be a new record if attained.