(Bloomberg) – Tesla Inc. reported a sequential gain in quarterly deliveries that seemed unlikely weeks ago, triggering a surge in its shares toward Wall Street’s most optimistic target price.
The electric car maker delivered more than 90,650 cars to customers in the three months ended June, exceeding analysts’ average estimate of about 83,000 in a Bloomberg News survey. Tesla delivered about 88,400 vehicles in the first quarter.
Tesla shares rose as much as 9.7% to $ 1,228 shortly after regular trading opened, approaching the $ 1,250 target set Thursday by Wedbush Securities. The action is about to triple this year.
Chief Executive Elon Musk overcame an approximately seven-week shutdown of Tesla’s California auto plant by increasing production at his new factory near Shanghai. Locating production in China is helping to reach more customers in the world’s largest electric vehicle market by lowering prices. The period was also the first full quarter of deliveries for the Model Y crossover, which Musk has predicted will become Tesla’s best-selling seller.
What Bloomberg Intelligence Says:
Tesla’s production in Shanghai has taken on the role of growth engine, as the large addressable market of early adopters drives an increase in demand and makes China the most important and largest market for the company. Tesla lobbied to keep its California factory open, and while demand is still affected by the virus, the US market is mature and no longer shows the growth that would take the company out of its niche.
– Kevin Tynan, Global Auto Analyst
Click here to read the research.
While deliveries were down nearly 5% from a year earlier, that’s a good sample relative to the declines that other automakers suffered due to the global pandemic that decimated vehicle demand in key markets.
“Tesla is winning because they have a product that is measurably better than its gas and electricity competitors,” Gene Munster, managing partner at venture capital firm Loup Ventures, wrote in a report. “It is becoming increasingly difficult to imagine a scenario where legacy automakers find a way to significantly expand the small share of electric vehicles they have today.”
The next big question for Musk, 49, is whether the deliveries were enough to make a quarterly profit. He suggested to employees earlier this week that it was possible to avoid a loss.
“Breaking down even looks really tight,” the CEO wrote to staff in an email seen by Bloomberg. “It really makes a difference for every car you build and deliver. Please do your best to guarantee victory!
Musk has sent many end-of-quarter emails to gather employees and signal investors, but Tesla has not always followed through on his optimism. The record 97,000 deliveries Tesla reported during the three months ending in September fell short of the 100,000 mark it emailed to workers.
If Musk is on the mark this time, Tesla could qualify for inclusion in the S&P 500 index. To be eligible, the company must report positive quarterly earnings based on generally accepted accounting principles. Beyond auto sales, Tesla can recognize revenue related to its automated driving system, and it also sells emission credits to other automakers.
“With strong second-quarter volumes, GAAP profitability is now in focus and appears feasible, which could lead to inclusion in the S&P 500,” Ben Kallo, an analyst at Robert W. Baird who rates Tesla wrote in a report. the equivalent of a hold. .
Analysts on the average Tesla project will report a loss of approximately $ 1.80 per share based on GAAP for the quarter, according to data compiled by Bloomberg. But higher-than-projected vehicle deliveries would make profitability a “less radical idea,” Dan Levy, an analyst at Credit Suisse, wrote in a report Monday.
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