Analyst Dan Ives says every metric is a ‘disaster.’ (0:15) Charles Schwab gets an upgrade. (3:15) ChatGPT sees soars in usage on ‘Ghibli effect.’ (3:42) Show NotesBofA picks 9 buys, 1 sell for Q2Episode transcripts: seekingalpha.com/wsb Sign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Chapter 1: What are the implications of Tesla's Q1 delivery shortfall?
Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon, today is Wednesday, April 2nd, and I'm your host, Kim Kahn. Our top story so far. Tesla fell short of expectations for Q1 deliveries as backlash against CEO Elon Musk and a changeover in the Model Y weighed.
The EV maker reported 336,681 deliveries for Q1, shy of the 377,000 consensus, and the lowest quarterly tally since 2022. Tesla said it produced 362,615 vehicles during the quarter, and 4% of the deliveries total was subject to operating lease accounting. Model 3 slash Y deliveries for the quarter were 323,800, while other models, the Cybertruck and Models S and X, accounted for 12,881 deliveries.
Chapter 2: Why are Tesla's delivery numbers considered a disaster?
Wedbush analyst Dan Ives says, We knew first quarter Tesla deliveries would be soft, but these numbers were bad. We are not going to look at these numbers with rose-colored glasses. They were a disaster on every metric. Refresh issues, but brand crisis key. The time has come for Musk. Fork in the road moment for Tesla.
Tesla delivered 462,890 vehicles and 495,570 vehicles in the two preceding quarters, and 386,810 vehicles in Q1 a year ago. Looking ahead, analysts have not yet slashed their delivery forecast for the remaining three quarters. The consensus estimates are for Q2 deliveries of 456,000, Q3 deliveries of 497,000, and Q4 deliveries of 544,000.
Chapter 3: What are the expectations for Tesla's future deliveries?
The optimistic forecasts are based on hopes that the new Model Y will be well-received and that a sub-$30,000 model will finally be introduced. Also in the mix, full-scale production of the CyberCab could boost Tesla's deliveries numbers significantly in 2026 if demand for the two-seat robo-taxi without a steering wheel takes off.
In addition, sales of Tesla's China-made electric vehicles fell 11.5% year-on-year in March amid intense competition. Tesla sold 78,828 China-made Model 3 and Model Y vehicles in the month, according to data from the China Passenger Car Association, but that was up sharply from the 30,688 units sold in February.
Chapter 4: How did Tesla's China sales perform compared to last year?
On the economic front, ahead of Friday's jobs report, ADP said private sector employment climbed by 155,000 in March, topping the 120,000 consensus and almost double the 84,000 added in February. But ADP's track record has been dismal in predicting the official figures.
Chapter 5: What are the highlights from the recent economic data?
Among active stocks, BlackBerry was under pressure after the company issued an outlook for fiscal 2026 that fell short of Wall Street's estimates. Looking to the next fiscal year, BlackBerry said it expects revenue to be within a range of $504 to $534 million, with a midpoint of $519 million, well below the $550.6 million analysts were expecting.
Chapter 6: How is BlackBerry's financial outlook affecting its stock?
It also expects adjusted EPS to be between $0.08 and $0.10 compared to the $0.10 estimate. For the upcoming quarter, it expects sales to be between $107 and $115 million, below the $128.4 million analysts were anticipating. And Citi upgraded Charles Schwab to buy from neutral as the firm pivots back to offense after completing its integration with Ameritrade.
Chapter 7: Why did Citi upgrade Charles Schwab to buy?
Analyst Christopher Allen said, We see a potential return to a net new asset slash organic growth story, which, if executed while maintaining rate sensitivity slash balance sheet discipline, should translate to multiple appreciation over time. Also, given Schwab's capital generation capacity, we see an improving capital return story as well.
In other news of note, OpenAI's ChatGPT saw a record surge in usage last year after the rollout of Chatbot's viral Ghibli effect feature. That allows users to generate AI art inspired by Studio Ghibli's iconic hand-drawn animation style. The animation imagery trend resulted in ChatGPT surpassing 150 million weekly active users for the first time this year.
We added 1 million users in the last hour, OpenAI CEO Sam Altman said in a post. Upon ChatGPT's launch more than two years ago, 1 million users were reached in five days. After the launch of its GTP 4.0 model that enables advanced image-generating capabilities, last week saw an all-time high in active users, in-app subscription revenue, and app downloads. That's according to data from Sensatower.
The surge strained OpenAI's servers, leading to temporary outages and slower service. Altman acknowledged capacity challenges, saying delays in new releases and occasional breakdowns should be expected. And in the Wall Street Research corner, B of A picked nine high-conviction buy-rated stocks and one sell-rated stock across several industries for Q2.
Anthony Casamassino, Senior Project Marketing Manager, says, Uncertainty around potential tariff announcements slated for April 2nd dominates market headlines.
Our economics team expects a combination of reciprocal and sector-specific tariffs with a base case of a 5 percentage point increase in effective tariffs versus pre-election, while our strategy team estimates a realistic bad case could result in a 10% hit to S&P EPS.
Among the buys are Bath & Body Works with a price target of $45 as guidance could prove conservative if collaborations drive incremental sales, candles return to growth, or new launches gain incremental traction. And Goldman Sachs with a $700 price target.
Analysts expect that the potential for a strong trading environment will persist given Trump policy actions and rapid changes to outlook for global monetary policy, regulatory relief on capital, and on day-to-day running of the business, June stress test results watched.
Steady execution on improving firm-wide profitability and growing the contribution from the asset and wealth management business all as potential catalysts to drive investor interests. The loan sells HIMS and HERS with a price target of $22.
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