JPMorgan revised down Tesla’s target price to $125 from $150 after the report of 4Q22 deliveries missing Wall Street expectations of 431,117 units even though the actual figure of 405,278 units took a huge leap from last year’s deliveries of 308,600.
For all of 2022, Tesla’s deliveries rose by 40% to a total of 1,313,851 units, while missing Musk’s 50% annual target.
JPMorgan stated that the 4Q deliveries were modestly higher than its model but seemingly at the cost of higher incentives, suggesting lower pricing and margin; moreover, 4Q deliveries were a miss vs. consensus expectations.
On the discount factor, JPMorgan pointed out at a $7,500 discount in the U.S. late in 4Q more reminiscent of traditional automakers trading at substantially lower earnings multiples, and multiple price cuts in China throughout the quarter.
JPMorgain lowered its 4Q EPS estimate from $1.19 prior to $1.16. Beyond the impact to near-term financials, another implication the firm saw from 4Q’s combination of softer than consensus volume and pricing is the impact on the stock’s growth narrative which as allowed many investors to believe the company is likely to grow unit volume at upwards of a ~+50% CAGR until such time as it is the world’s largest automaker.