$Tesla (TSLA.US)$The second-quarter delivery results exceeded Wall Street's expectations, bringing investors a surprise.
Given the current market sentiment surrounding electric cars, investors may be curious as to how Tesla achieved this. In fact, this is due to market expectations, market performance, and the company's own measures.
The company delivered 443,956 vehicles in Q2, well above the expected 438,000 vehicles. Wall Street estimates ranged from 420,000 to 425,000 vehicles. Tesla produced about 411,000 vehicles during the quarter, which is also positive news. Sales exceeding production means inventory reduction, which will alleviate the pressure to lower prices.
Another good news is that Tesla said it deployed 9.4 gigawatt-hours of battery storage this quarter, its best quarter ever. There's almost nothing to fault in this delivery report.
Tesla closed up more than 10% at $231.26 on Tuesday, up nearly 17% in the past two trading days.
CFRA analyst Garrett Nelson wrote after the report was released, "We have raised our 12-month target price by $20 to $250, and Tesla's data greatly alleviates concerns about weak demand for electric cars."
Nelson rates Tesla stock as "Buy," and Wedbush analyst Dan Ives also gives a "Buy" rating with a target price of $275 per share. Ives said, "In short, we believe Tesla's electric car demand story is coming back, and the worst is over before the historic Robotaxi Day on August 8."
How did Tesla exceed delivery expectations?
Although Tesla's deliveries decreased by about 5% year-on-year for the second consecutive quarter, the situation is better than expected. In early 2024, global electric vehicle sales growth will slow down.
Wall Street's estimates often decline before the release of any quarter. A few weeks ago, analysts expected deliveries to be around 440,000 vehicles. This time, the market became too nervous about expectations before the quarter, lowering delivery expectations and making it easier for Tesla to exceed expectations.
Foreign media pointed out that any number above 420,000 should be enough to support the stock price. The Q2 earnings report, which has greater potential to affect stock prices, will be released a few weeks after the delivery news. Tesla stock has averaged an 11% fluctuation after the past four quarterly reports.
As of Monday's close, Tesla stock has fallen 7% this year, while the S&P 500 index has risen about 15%.
Edited by Jeffrey