How Too Much Tech Hurt Tesla Stock

Tesla StockTesla Stock Hurt After Missing Delivery Estimates

Tesla stock dropped nearly two percent in after-hours trading after Tesla Motors Inc (NASDAQ:TSLA) announced that it had failed to meet its fourth-quarter and full-year delivery estimates.

Tesla stock took the hit as the company finished the year with 76,230 cars delivered, short of the 80,000 to 90,000 projected. Tesla had reaffirmed throughout 2016 that despite missing both first- and second-quarter estimates, it would still hit the yearly numbers. (Source: “Tesla Whiffed on Production Goal but Elon Musk Should Be Happy About One Thing,” TheStreet, January 4, 2017.)

On the bright side for Tesla stock, the company did have a relatively strong fourth quarter in terms of orders. With 22,000 models sent out, it was below estimates but higher than previous quarters. “Model S” and “Model X” sales were up 52% compared to the same quarter in 2015.

The company claimed that a changeover in its aptly named “Autopilot” technology—which powers Tesla’s autonomous vehicle features—delayed the production and shipping of vehicles.

But the real issue is what this means for the future. While the company didn’t fall dramatically short of the guideline, Elon Musk has claimed that, by 2018, the company will deliver 500,000 cars. Critical to that lofty goal is the consumer-focused “Model 3,” set to begin shipping this year. Investors are watching closely for developments related to the new car’s production, as any delays would surely be damaging to Tesla stock.

Still, Tesla stock fans have some cause for optimism. While ultimately falling short of the estimates, the company far surpassed 2015’s 50,000 vehicles shipped.

“We were ultimately able to recover and hit our production goal, but the delay in production resulted in challenges that impacted quarterly deliveries, including, among other things, cars missing shipping cutoffs for Europe and Asia,”wrote the company in a statement. (Source: “Tesla fails to come through on its promise to deliver 80,000 to 90,000 cars in 2016,” Recode, January 3, 2017.)

The statement continued, “In total, about 2,750 vehicles missed being counted as deliveries in Q4 either due to last-minute delays in transport or because the customer was unable to physically take delivery.”