Tesla Motors Inc (NASDAQ:TSLA)‘s vehicle delivery numbers are out, and they’re in line with expectations. For its third quarter, Tesla delivered 11,580 vehicles (including first deliveries of the Model X SUV), in line with company guidance and modestly higher than second quarter’s 11,532 vehicles delivered. Tesla’s stock inched up 0.27% in after hours trading, after jumping more than 3% on Friday. Let’s take a closer look at the electric car company and examine how the smart money views it.
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“Although we had one week of planned production shutdown, this delivery level represents a 49% increase over Q3 last year as well as the sixth consecutive quarter of growth. There may be small changes to this delivery count (usually well under 1%), as Tesla only counts a delivery if it is transferred to the end customer and all paperwork is correct,” the company said in a statement on its website.
Tesla’s vehicle delivery numbers are important because the company needs to increase production quickly to generate the profits that investors expect. At its current 50,000 vehicles per year rate, Tesla doesn’t realize the same economies of scale that General Motors Company (NYSE:GM) or Ford Motor Company (NYSE:F) realizes and isn’t profitable. Because the company is expanding rapidly, Tesla is also cash flow negative and at the mercy of the market for a portion of its capital expenditure budget.
According to its road map, Tesla plans to produce 85,000 vehicles next year, and 500,000 vehicles a year by 2020. Any weakness in demand, or glitches in manufacturing processes will negatively affect those delivery numbers and could send Tesla’s high flying stock lower. The stock previously retraced from $290 to $180 in part because the company lowered its vehicle guidance numbers.
So far, however, all is well. Tesla’s third quarter deliveries mean the company has delivered 33,117 vehicles so far this year, or 16,883 vehicles below Musk’s guidance of 50,000-55,000 vehicles for 2015. Tesla could still hit its guidance, since the fourth quarter is traditionally a busy one. With Tesla’s shares up 11.3% year to date, many investors are clearly betting on it.
However, hedge funds are cautious on Tesla Motors Inc (NASDAQ:TSLA). According to our data, 26 hedge funds owned $1.39 billion worth of the company’s stock, which represented 4.10% of the float at the end of June, versus 29 funds with stakes worth $1.04 billion a quarter earlier. Moreover, among the funds we track, many own positions in ‘Put’ options underlying shares of Tesla. Ken Griffin‘s Citadel Investment Group increased its position by 34% to 1.37 million shares held in ‘Put’ options during the second quarter, while Paul J. Isaac’s Arbiter Partners Capital Management reported a ‘Put’ stake underlying 842,000 shares. Overall, 25.94 million shares, or 25.7% of the float, were short on September 15 versus 22.19 million shares on September 15, 2014. Among investors that own shares of the company, Daniel Benton’s Andor Capital management reported holding 1.0 million shares in its latest 13F.
Despite the fact that Tesla is considered overvalued by the smart money, analysts are very optimistic about the company’s prospects. A couple of days ago, three analysts reiterated their bullish ratings, including Global Equities Research and Oppenheimer, which have ‘Overweight’ and ‘Outperform’ ratings with price targets of $385 and $340, respectively, while Stifel Nicolaus re-confirmed its ‘Buy’ rating with a target of $400 per share. Tesla is capable of reaching this price over the long-term, but as for now, the smart money needs to see more evidence in order to change its mind regarding the stock.
Disclosure: none
