Tesla Stock Rises on Optimism for Quarterly Deliveries

Tesla stock (ticker: TSLA) saw an increase on Wednesday as reports about the company's upcoming quarterly delivery report sparked investors' optimism regarding demand for Tesla vehicles.

Positive Outlook

Recently, Tesla stock rose by 1.1% to reach $222.18, while the Dow Jones Industrial Average and the S&P 500 both experienced slight gains of 0.2% and 0.1% respectively. Bloomberg revealed an internal memo from CEO Elon Musk, indicating that the company was "on track" to achieve a record-breaking number of quarterly deliveries "if we go all out." The official announcement for the second quarter is expected to be made next week.

Addressing Logistics

According to Musk's memo, demand for Tesla vehicles was not the concern; instead, logistics posed a challenge. Musk wrote, "We already have enough vehicle orders to set a record, but the right cars are not yet all in the right locations."

Previous Records and Market Expectations

Tesla recognises revenue when a customer takes delivery of a vehicle. In the fourth quarter of last year, Tesla achieved a record of 90,700 deliveries. For the second quarter, Tesla has guided investors towards a range of 90,000 to 100,000 deliveries, with analysts' consensus being around 92,000.

Progress in North America Deliveries

Tesla Stock Shows Signs of Recovery

Tesla stock, which faced a downfall of approximately 30% in 2019, is now experiencing a resurgence with a 20% increase in June. This boost in optimism can be attributed to the company's performance in the second quarter.

Wedbush analyst Daniel Ives, who holds a Neutral rating and a $230 price target on Tesla stock, has revised his second-quarter delivery estimate to 84,000 vehicles, down by 4,000. The average target projected by FactSet stands at $278. Moreover, an upbeat assessment of the company by a bullish analyst was also covered this Tuesday.

To stimulate sales in the short term, Tesla has been reminding consumers that the federal tax credit they can avail of will further decrease in July. This strategy aims to create a sense of urgency among potential buyers.

In addition, Tesla encountered a situation at the end of the first quarter where over 10,000 vehicles were in transit to customers worldwide but remained undelivered. Elon Musk, CEO of Tesla, responded on Tuesday that he would spend his upcoming birthday working on Tesla's global logistics when questioned about his plans. This emphasizes the company's commitment to resolving any transportation-related challenges.

"It's all about driving improved demand and sustained profitability going forward, which remains the elusive goal for Musk," stated Ives. Undoubtedly, Tesla has become a "prove me" stock, and the key to its success lies in achieving commendable second-quarter delivery numbers.