Tesla stock suffers worst-ever year in 2022 despite deliveries hitting record high

Electric vehicle charging
Josh Warner
By :  ,  Market Analyst

Tesla delivered 1.3 million vehicles in 2022

Tesla has revealed that it delivered 405,278 vehicles in the final three months of 2022, which marked a new record high but still fell short of the 420,000 to 430,000 deliveries forecast by analysts.

That meant Tesla delivered a record 1.3 million vehicles in 2022, marking a 40% jump from the 936,222 units shipped in 2021. While impressive, this fell short of Tesla’s goal to grow deliveries by around 50% each year.

Tesla deliveries hit a record high in 2022, but missed expectations

 

Tesla continues to suffer from logistical problems

The annual growth in deliveries was driven by a stronger performance in the second half of the year following the problems we saw during the first. Widespread supply chain issues held back growth in both output and deliveries in the first and second quarters of 2022, as did severe Covid-19 disruption in China. We then saw these headwinds ease, but only to be replaced by new logistical issues that has made it more difficult to ship cars to customers. This saw the gap widen between the number of vehicles being made to the number being delivered in the second half, as demonstrated by the chart below. Notably, Tesla’s annual production rose over 47% in 2022, which was much closer to its 50% target.

Tesla's delivery numbers continue to lag production

Tesla confessed that deliveries lagged production again in the fourth quarter because it is taking longer to get them to customers, leading to an increase in the number of vehicles in transit at the end of the fourth quarter compared to what we saw in the third. CEO Elon Musk vowed to get on top of this issue back in October, but the situation appears to have worsened considering it produced over 34,400 more vehicles than it delivered in the fourth quarter, up from the 22,000 gap reported in the third.

This could continue to weigh on sentiment going forward as it threatens Tesla’s goal to grow vehicle volumes by 50% each year, which in turn is a major factor that underpins its valuation and prospects.

 

Tesla 2023 outlook: How many cars can it deliver?

Wall Street believes the logistical issues will ease in 2023 and forecast that both production and deliveries will rise another 43% this year, leading to a more normalised balance between the two metrics. Analysts currently anticipate the carmaker will produce 1.96 million cars in 2023 and deliver 1.88 million of them to customers.

While analysts remain confident that Tesla can celebrate another record year in 2023, we have seen concerns shift from supply toward demand in recent months. Rising interest rates and fears of an economic slowdown are both igniting concerns that demand could slow this year. That is occurring at a time when competition is intensifying across the world, from traditional automakers like General Motors and Ford to newer outfits such as BYD, NIO and Rivian.

 

Tesla earnings date pencilled in for this month

Tesla will release earnings for the fourth quarter of 2022, as well as the full year, after US markets close on Wednesday January 25.

The company has also announced it plans to hold an investor day on March 1, which will be livestreamed from its Gigafactory in Texas. ‘Our investors will be able to see our most advanced production line as well as discuss long term expansion plans, generation 3 platform, capital allocation and other subjects with our leadership team,’ Tesla said in a statement.

 

Tesla shares suffer worst year in 2022 since IPO

Tesla shares fell 65% in 2022, marking the worst performance on record since the electric carmaker went public back in 2010. That saw Tesla’s valuation plunge by a staggering $850 billion during the year as a myriad of headwinds hit the stock, from Covid-19 disruption in China, logistical issues and fears over demand to the offloading of stock by Musk and his controversial takeover of social media platform Twitter, which has led to accusations that Tesla is lacking leadership at a critical time.

That has brought Tesla’s valuation down dramatically considering the company is currently trading at a blended forward price-to-earnings ratio of 23.1x compared to a five-year average of 127.7x, according to figures from Bloomberg. Still, while much more reasonable, Tesla continues to trade at a huge premium compared to its rivals because it is the only pure-play electric carmaker delivering profits – with newer startups earning much lower multiples because they are still in the red and traditional automakers still being punished for their legacy businesses built around combustion engines.

 

Where next for TSLA stock?

Tesla shares slumped to their lowest level in 29 months in the final days of 2022 after suffering a sharp fall late in the year. We have seen some support emerge above the $108 mark, which appears to have been low enough to have attracted buyers back into the market in the last two trading days of the year.

Still, the severe fall seen in late 2022 was accompanied by a surge in volumes, with the average volume at time over the past 20 sessions coming in over 60% above the 100-day average. Volumes have increased further considering the 10-day and 5-day figures are even higher, suggesting the current downtrend could be gaining traction.

The 29-month low is now the immediate level of support that must hold to avoid fresh lows. A fall from here risks bringing in the key psychological level of $100 back into the picture. A move below here would open the door to the next level of support we saw back in mid-2020 at $95.30.

The recent rebound will provide some hope that Tesla shares have found the bottom considering it pushed the RSI deep into oversold territory, supporting the view that a new level of support could emerge around current levels. Still, the stock still has a big job to break out of the downtrend that can be traced back to late September. If it can achieve this, then the stock can recapture the $152 level of resistance seen in September and October 2020 before targeting the November 2022-low of $167.50.

Can Tesla stock find support after hitting 29-month lows?

Notably, the 41 brokers that cover the stock believe the selloff in 2022 has provided an opportunity considering they have an average target price of $240.50, which is over 95% above current levels. However, it is worth noting that this has been dropping quickly in recent months given the average target price sat just under $300 just three months ago to suggest that the risk to its target price continues to lean to the downside for now.

 

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