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Tesla's Delivery Miss Was 'Meaningless,' FBN's Seyrafi Says


While some analysts are viewing the recent first-quarter miss on deliveries figures for Tesla Motors Inc (NASDAQ: TSLA) as indicative of future downside for the company, FBN analyst Shebly Seyrafi countered that argument, saying the miss was "meaningless."

"Last night, TSLA announced that it delivered 14,820 vehicles in FQ1, a miss of ~1,180 vs. the ~16k consensus, due to severe Model X supply shortages in January and February that lasted longer than expected," Seyrafi began.

Seyrafi placed the miss in a broader context, explaining, "TSLA delivered only 2,400 Model X vehicles last quarter, implying an average delivery rate of ~186 per week. However, by the last week of March, the build rate on Model X rose to 750 per week, so we expect better results going forward."

Related Link: Credit Suisse Hikes Tesla Target To $280 After Delivery Miss, Expects Strong Back-Half Of 2016

'Rather Meaningless' When Looking Forward

"In any case, the near-term results are rather meaningless compared to the huge Model 3 opportunity ahead," Seyrafi assured. "TSLA has had preorders of ~276k so far (and counting) for this device, so we believe that the key challenge for the company will be on the production side vs. the demand side."

Concerning what led to the deliveries miss, Seyrafi clarified, "The root causes of the FQ1 2016 miss were 1.) adding too much new technology into the Model X in version 1, 2.) insufficient supplier capability validation, and 3.) TSLA not having broad enough internal capability to manufacture the parts in-house. The parts in question were about a half dozen out of more than 8k unique parts.

"TSLA is addressing all three root causes to make sure that they are not replicated with the key Model 3 launch," Seyrafi defended.

FBN currently has an Outperform rating on Tesla, with an attached price target of $325.

At time of writing, Tesla was flat on the day, trading at $246.82.

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