Morgan Stanley Remains Bullish Despite Tesla's Q3 Deliveries Being 10% Under Expectation

Morgan Stanley remains optimistic despite Tesla's (NASDAQ: TSLA) Q3 deliveries being 10% below their expectation. The firm reiterated its Overweight rating and $383 price target.

Morgan Stanley reiterated its Overweight rating and $383 price target for Tesla even after the company's Q3 delivery report fell short of expectations, according to investing.com. Deliveries for the past quarter are 5% off the consensus forecast and 10% off Morgan Stanley's forecast. The company said that 22,093 vehicles were still on their way and could not be delivered to customers on time due to the fact that they were unable to maintain transportation capacity and reasonable costs during peak logistics weeks that fall at the end of the quarter.

A note from Morgan Stanley states: “It’s unlikely Tesla will compensate for the FY shortfall fully in 4Q. Combined with a mostly non-event AI day, we’d expect shares to give back recent relative strength.”

Tesla deliveries in Q3 were 343,830 units compared to the consensus estimate of 362,733 units. The shortfall of nearly 20,000 units represents a revenue shortfall of about $1 billion and, according to Morgan Stanley estimates, roughly $300 million in lost gross margins compared to the consensus.

Morgan Stanley continues to believe that demand for Tesla products exceeds supply, however, it knows there is a limit to how much Tesla can continue to raise prices without hurting demand. The firm expects the forthcoming Master Plan Part 3 to directly address the problem of the manufacturing process and supply chain so that the company can better control its destiny in an increasingly deglobalizing world.

© 2022, Eva Fox | Tesmanian. All rights reserved.

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