Tesla

Tesla Beats Q2 Vehicle Deliveries; Shares Soar 8%

Tesla Inc, an American electric vehicle and clean energy company based in California, has exceeded analysts’ projection of vehicle deliveries in the second quarter, defying a trend of falling sales amid the ongoing coronavirus pandemic lockdown, sending the shares of the electric carmaker up over 8%.

In the second quarter, Tesla manufactured more than 82,000 vehicles and delivered approximately 90,650 vehicles. It delivered 80,050 units of its new Model Y vehicles and Model 3.

“While our main factory in Fremont was shut down for much of the quarter, we have successfully ramped production back to prior levels. Our net income and cash flow results will be announced along with the rest of our financial performance when we announce Q2 earnings. Our delivery count should be viewed as slightly conservative, as we only count a car as delivered if it is transferred to the customer and all paperwork is correct,” Tesla said in the statement.

Final numbers could vary by up to 0.5% or more. Tesla vehicle deliveries represent only one measure of the company’s financial performance and should not be relied on as an indicator of quarterly financial results, which depend on a variety of factors, including the cost of sales, foreign exchange movements and mix of directly leased vehicles, the electric car maker added.

Following this announcement, Tesla shares surged more than 8% by about $85 in early trading to $1,208.

Tesla outlook and price target

Twenty-six analysts forecast the average price in 12 months at $805.85 with a high of $2,000.00 and a low of $275.00. The average price target represents a -33.46% decrease from the last price of $1,210.99, according to Tipranks. From those 26, eight analysts rated ‘Buy’, nine analysts rated ‘Hold’ and nine rated ‘Sell’.

Wedbush raised the target price to $1,250 from $1,000 with a high of $2000 under a bull scenario. UBS raised the target price to $800 from $420. Morgan Stanley target price is $650 with a high of $1200 under a bull scenario and $190 under the worst-case scenario.

Analyst comment

“We note that 2Q would have benefitted by factors such as pent-up demand for the Model Y, the early China ramp, and relatively ample inventory levels to begin the quarter, but one must also consider their biggest factory (Fremont) was totally shut for the better part of 2 months and all the related distribution disruption related to COVID-19. While still a stretch, some investors are beginning to ask us if Tesla could see positive earnings revisions taking forecasts to levels even higher than pre-COVID. Imagine that,” noted Adam Jonas, equity analyst at Morgan Stanley.

“Using this delivery number in place of our prior Q2 delivery estimate, this would bring our full-year forecast to ~433k, which compares to current consensus in the range of 400-420k. We would expect consensus expectations to rise meaningfully, potentially back toward Tesla’s initial 2020 guidance to “comfortably exceed” 500k units. Right now, we see deliveries meaningfully above 500k as more of a bull case. We now see 400k deliveries as more of a bear case than a base case,” he added.