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Tesla's Model 3 Preorders Missed Some Wall Street Expectations

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While Tesla Motors Inc (NASDAQ: TSLA)'s Model 3 reservation figures wowed most this past weekend, expectations for continued momentum through the week have not been met with the same excitement.

The unveiling event of the Model 3 was last Thursday, March 31. By April 3, Elon Musk had tweeted that reservations had come in at 276,000 for the first three days.

Following those initial numbers, the first full-week numbers were anticipated to be 350,000-400,000 vehicles, according to one Wall Street firm.

Entering Day 5

Earlier in the week, Pacific Crest's Brad Erickson highlighted his projections, "[W]e expect Q1 deliveries to be announced sometime today (April 4), where we expect relatively in-line results. We expect the final Model 3 reservation disclosure on Wednesday, per management; however, we continue to view fundamental upside scenarios in the name as more limited given the recent stock appreciation."

Related Link: Tesla Predicted To Hit 350K–400K Model 3 Reservations By Wednesday

Erickson elaborated, "With nearly 200,000 orders as of Friday (April 1), CEO Elon Musk noted that Tesla was seeing an average selling price of roughly $42,000, which, against the latest stated total, implies future revenue of $11.6 billion. Based on average demand run rates we've been seeing, we'd expect a disclosure of roughly 350,000 to 400,000 reservations potentially by Wednesday for the first full week of reservations. This would be in line with our estimates of roughly 247,000 cumulative deliveries for 2018–2020 if you assume a two-thirds conversion ratio for reservations to actual orders."

April 7

The Tesla Team's blog announced that this past week has been "the week that electric vehicles went mainstream."

"A week ago, we started taking reservations for Model 3, and the excitement has been incredible. We've now received more than 325,000 reservations, which corresponds to about $14 billion in implied future sales, making this the single biggest one-week launch of any product ever," the blog read.

Is It A Disappointment?

Taking the midpoint of Pacific Crest's expectations (375,000 preorders, $15.7 billion), it appears that the new Model 3 number of 325,000 is about $2 billion short.

However, it should be noted PacCrest's numbers are not a consensus figure. It's too early to tell how the market will react to Tesla's numbers over the next few weeks heading into earnings.

Posted-In: Brad EricksonNews Guidance Short Ideas Travel Tech Trading Ideas General


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