Tesla Inc shares fell 11 percent on Thursday after a bigger-than-expected drop in first-quarter deliveries, led by waning demand for its luxury Model S and X vehicles, added to worries about the electric-car maker's finances.
At least four Wall Street brokerages cut their price targets on the company's stock, citing concerns about profitability and revenue after deliveries of the higher-priced luxury cars more than halved compared with the fourth quarter.
RBC analysts called Model S/X deliveries "very disappointing" and estimated the numbers would translate to a more than $1 billion shortfall in revenue compared to previous estimates.
The company had already flagged in February that it expected to post a first-quarter loss as it launched its cheaper $35,000 version of the Model 3 sedan.
In the quarter, Tesla delivered 50,900 Model 3s, the linchpin of its growth strategy, falling short of analysts' estimate of 58,900, according to IBES data from Refinitiv.
Tesla also pinned the blame for the first-quarter delivery drop to longer transit times, which analysts said could impact cash flow, even though the company claimed it had sufficient cash on hand.
The company said it had delivered only half of the quarter's numbers by March 21, with 10,600 vehicles still in transit at the end of the quarter. By comparison, only 1,900 vehicles were in transit at the end of the fourth quarter.
Cowen and Co analysts said that the delivery and transit details suggested "cash was likely dangerously low" after Tesla paid off a $920 million convertible bond obligation in cash in the beginning of March.
Still, there were no new downgrades by brokerages on Tesla shares. The company is currently rated "buy" or higher by 12 of the 30 brokerages covering the company, 7 "hold" and 11 "sell" or lower.
The carmaker reaffirmed its forecast to deliver between 360,000 and 400,000 vehicles this year, and said U.S. orders for the new Model 3 outpaced what the company was able to fulfill in the quarter.
Nord LB analyst Frank Schwope called the numbers "more shocking than disappointing" and said there remain doubts whether Tesla could deliver 400,000 cars this year.
Chief Executive Officer Elon Musk, who is under pressure to deliver Model 3 to new international markets efficiently, while guarding precious working capital, has been engaged in a public battle with U.S. regulators stemming from his tweets about Tesla's production estimates.
His lawyers will argue on Thursday that he did not violate a fraud settlement with the U.S. SEC and should not be held in contempt, the latest twist in a high-profile battle between the billionaire and the government.
"With Musk due in court to face the SEC imminently, Tesla remains one of the most absorbing companies we cover, and one which for good or ill, never ceases to surprise," Hargreaves Lansdown analyst Nicholas Hyett said.
Musk's fight with the SEC, to play out in a Manhattan federal court hearing, has raised investor worries that it could lead to restrictions on his activities or even his removal from Tesla, while distracting him at a pivotal point in the company's expansion.
The price of Tesla's $1.8 billion junk bond fell by the most in seven months and the cost to insure its debt against default surged on Thursday.
(Reporting by Vibhuti Sharma in Bengaluru; Editing by Shounak Dasgupta and Saumyadeb Chakrabarty)