Behind the video
Tesla Stock: How Sell-side and Buy-side Analysts Influence Your Investment
Overall Thesis
Dave Lee explains why Tesla's Q3 2023 delivery number of ~435K, though below sell-side consensus of ~455K, was not a significant miss once you account for the difference between public sell-side analyst estimates and the more accurate, less visible buy-side analyst estimates. He argues institutional investors (who actually move the stock) are focused on longer-term revenue, margins, and macro factors like Fed rate decisions rather than a single quarter's delivery miss.
Narratives
TSLATeslaTesla's Q3 delivery number of ~435K vehicles came in below sell-side analyst consensus of ~455K, but closely matched the more focused Tesla-specific tracker's estimate of ~441K, suggesting the 'miss' narrative driven by sell-side analysts is overstated. The stock barely moved on the news, which the speaker attributes to institutional (buy-side) investors having already anticipated the planned production dip from factory upgrade shutdowns and instead focusing on longer-term revenue, margin, and macroeconomic trends.
Key Arguments
- Delivery numbers matter because they are the earliest input into quarterly revenue, gross margin, and operating profit calculations
- Sell-side analysts covering many automakers may be less focused and less accurate on Tesla-specific delivery estimates than dedicated Tesla trackers
- A Tesla-focused tracker's estimate of 441,000 was much closer to the actual 435,000 delivered than the ~455,000 sell-side consensus
- Tesla had already warned in the prior earnings call that production would be down this quarter due to planned factory upgrade shutdowns
- Buy-side analysts, who actually manage institutional money and move stock prices, are evaluated on investment performance rather than generating trading commissions, making their (non-public) expectations arguably more representative of true market expectations
- Institutional investors, not retail investors or sell-side analyst headlines, are the ones capable of moving a large-cap stock like Tesla significantly over time
- Institutional investor outlook is driven more by future revenue, margin trends, and macro factors (like Fed interest rate decisions) than a single quarter's delivery number
Risks acknowledged
- Some people are calling the Q3 delivery number a 'big miss' relative to the ~455,000 sell-side consensus estimate
Hedges & Caveats
- All content is for discussion and illustrative purposes only, not financial advice
- Views expressed are personal opinion as of the recording date and subject to change
- Author is long TSLA and other stocks at time of publish