Tesla Spikes as Quarterly Profit Takes Investors By Surprise; Musk Says Lockdown is ‘Key Risk’ to Biz

Tesla Inc.’s (TSLA) stock rose as its first-quarter earnings beat analysts’ expectations on the back of demand for its electric cars.

Shares were up as much as 8% to $867.60 in pre-market U.S. trading. The electric automaker reported adjusted earnings of $1.24 per share in the first quarter, while analysts had expected a loss of 36 cents per share.

Total revenue increased 32% to $5.99 billion year-on-year, beating analysts’ estimates by $140 million. The company didn’t provide any financial outlook for 2020, saying it was difficult to forecast when vehicle production and global supply would return to levels prior to the coronavirus outbreak.

Tesla’s production levels were affected by the coronavirus-related orders only towards the end of the quarter as one of its main factories shut down on March 24. According to a Bloomberg report this week, the company is planning to ask some employees to return to work at its factory in Fremont, California from next week. This request comes before the end of San Francisco’s lockdown period, where stay-at home directives are still in place due to Covid-19.

Despite the production interruptions, the company said it was still on track to exceed 500,000 vehicle deliveries this year.

Speaking to investors on Wednesday, Tesla’s Chief Executive Officer Elon Musk called the stay-at-home regulations a “key risk” to the business.

“To say that they cannot leave their house and they will be arrested if they do, this is fascist,” Musk said. “This is not democratic, this is not freedom. Give people back their goddamn freedom!”

Tesla shares extended gains on Wednesday taking its year-to-date advance to a staggering 86%. The stock is the top gainer on the Nasdaq-100 Stock Index this year.

Credit Suisse analyst Dan Levy, who has a Hold rating on the stock with a $580 price target said that the rally is somewhat overrun in view of weak near-term supply and demand issues.

“Tesla’s furloughs, salary cuts, and requests for rent reduction have all been interpreted as signs of a near-term demand drop, which hasn’t yet been seen by the public,” according to Levy, adding that Q2 delivery consensus of 75,000 is too high and that he expected 50,000-60,000. “This could drive a near-term air pocket for the stock.”

Like Credit Suisse’ Levy, the consensus of Wall Street analysts has a Hold rating on the stock based on 10 Holds, 9 Sells and 6 Buys. The $594.40 average price target forecasts shares will decline 26% in the next 12 months. (See Tesla’s stock analysis on TipRanks)

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