Just last week, Tesla shares fell hard after third-quarter deliveries failed to keep pace with Elon Musk’s lofty target.
Elon Musk Sets the Bar Too High
Tesla engineered a record third quarter in terms of production and deliveries, putting the automaker one step closer to meeting ever-growing demand for its vehicles. The company produced 96,155 vehicles in Q3, which includes 79,837 Model 3s and 16,318 of the Model S and Model X. During the same quarter a year ago, Tesla built 80,142 cars.
Deliveries totalled 97,000 vehicles during the most recent quarter, consisting of 79,600 Model 3s and 17,400 Model S and Model X combined.
But the numbers failed to impress Wall Street, and shares of Tesla plunged shortly thereafter. That’s because Elon Musk, Tesla’s CEO, told employees last month that the company was on track to deliver 100,000 automobiles in the third quarter.
The email was leaked to the public Sept. 26, fuelling optimism that Tesla was on track for its first 100,000 quarter.
“We have a shot at achieving our first 100,000 vehicle delivery quarter, which is an incredibly exciting milestone for our company!” Musk said in the leaked email.
Lawsuit Revelations Surface
Tesla’s stock price is also being pressured by revelations of a shareholder lawsuit against the company over its 2016 purchase of SolarCity.
Newly unsealed court documents revealed last month that Tesla shareholders are accusing the company of improperly valuing the SolarCity acquisition, which was worth $2.6 billion. SolarCity is also being accused of hiding important details about its relationship with SpaceX, another company under the purview of Musk.
The documents claim that Musk was building a “pyramid” of companies with himself at the top.
As CNBC reports, the documents say: “Prior to the Acquisition, Musk described Tesla, SolarCity, and SpaceX as a ‘pyramid’ atop which he sat; it was ‘important that there not be some sort of house of cards that crumbles if one element of the pyramid . . . falters.’”
The filing claims that SpaceX poured roughly $165 million into SolarCity before the acquisition was finalized. The solar panel maker became insolvent shortly after the deal was closed, according to Ernst & Young.
Elon Musk’s company is likely to face heightened scrutiny heading into earnings season. The company is scheduled to report Q3 results in early November. Analysts at FactSet are forecasting an adjusted loss per share of $0.42 on revenue of $6.4 billion.
Tesla’s share price rose more than 3% on Tuesday to peak at $243.59. It was last seen trading just below $243.
By comparison, the Nasdaq Composite Index was down nearly 1%. The S&P 500 Index’s information technology index was down 0.9%.
At current values, TSLA has a total market capitalization of $45.4 billion.