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Tesla (TSLA): Did Strong Q2 Numbers Turn Wall Street’s Feeling On Stock?


Tesla (TSLA) bulls feasted on record quarterly delivery numbers as the company rebounded from two weak quarters. The quarterly delivery number for all models – which came in at ~95,200 – beat Wall Street’s estimate of 90,700 and quells doubts over what many considered to be diminishing demand for Tesla’s vehicles.

Total deliveries were up 51% from last quarter, where Tesla’s deliveries were low due to fading tax credits for their vehicles and the company’s push to get orders in before the end of 2018. Wall Street also focused on posted Model 3 deliveries because that line is most crucial to Tesla’s success as a mass-market carmaker. Model 3 deliveries finished at 77,550 which marginally beat out the Street’s estimate of 74,100. Although the Model 3 numbers were a priority for analysts, Model S and Model X deliveries also beat expectations. Tesla noted that 7,400 vehicles were in transit, which would have taken deliveries above their original guidance of 90K-100K for the quarter. Overall, Wall Street reacted well to Tesla’s announcement with shares up ~7% in after-hours trading.

Wedbush analyst Daniel Ives believes the company “got the demand story back on track” and took “a major step in the right direction.” Ives is maintaining his Neutral rating and $230 price target for Tesla (To watch Ives’ price target, click here).

Ives thesis remains unchanged for now because “the stock and future of Tesla all reside on the sustainable demand going forward and elusive profitability profile which continues to be a major concern on the name.” Ives is not convinced of Tesla’s ability to sustain this quarter’s success, considering it a “battleground stock for the bulls/bears over the coming quarters.” One interesting aspect to consider is if Tesla once again benefited from some “pull forward demand” as a result of customers choosing to buy vehicles prior to the July 1st tax credit reduction. This type of consumer behavior has helped boost Tesla’s numbers before and analysts are aware of its tendency to inflate demand prospects in certain quarterly reports.

Ultimately, the quarterly numbers look very promising for Tesla’s future, but they will need to string together a few more solid quarters in a row before skeptical analysts such as Ives completely buy-in. TipRanks analysis of 26 analyst ratings on TSLA over the last 3 months shows that there is a Hold consensus on the stock. 9 analysts recommend Buying Tesla, 5 advise Holding, and 3 have the stock rated as a Sell. The average price target for TSLA is $255.30, which represents a 13.7% upside on the current price (See TSLA’s price targets and analyst ratings on TipRanks).

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