Tesla’s Market Cap Surpasses Toyota’s as Deliveries Beat Wall Street Forecasts

Tesla’s Market Cap Surpasses Toyota’s as Deliveries Beat Wall Street Forecasts
July 3, 2020

 

The shares of Tesla Inc (Nasdaq: TSLA) skyrocketed yesterday after the electric car manufacturer revealed that it delivered roughly 90,650 cars in the second quarter of 2020, easily surpassing Wall Street forecasts, showing that the automaker was able to manage the economic slump better than its peers. The stock ended Thursday’s trading session at $1,208.66, up $89.03 or 7.95% from the prior close. During intraday trading, the stock hit a new 52-week high of $1,228.

The Palo Alto, California-based Tesla’s deliveries decreased by a mere 4.8% from the comparable quarter last year, despite a sharp decline in automobile sales across the globe. It should be noted that delivery figures are a rough estimate of sales figures posted by Tesla, and the company’s stats eclipsed its peers.

During the second quarter, all major automobile manufacturers, including General Motors, Fiat Chrysler, Ford, and Toyota Motor, recorded almost a 30% drop in sales due to COVID-19 related lockdown. Tesla was expected to deliver 72,000 vehicles in the last three months as per a survey conducted by FactSet. Analysts surveyed by Bloomberg had anticipated 83,000 vehicle deliveries in 2Q 2020.

The company delivered 80,050 Model 3 sedans and Model Y cross-over SUVs.  Additionally, older and premium Model S and X car deliveries totaled 10,600. Interestingly, the data was published a day after the CEO Elon Musk sent an email to all the employees cheering their “amazing” execution in a period of uncertainty.

In 1Q 2020, Tesla delivered 88,400 vehicles, while manufacturing 102,672 units. During 2Q 2019, the company manufactured 87,048 units, including 72,531 Model 3s, while delivering 95,200 vehicles, including 77,550 Model 3s. For several weeks, the company had to shut down its manufacturing facility in Fremont, California, in the second quarter due to COVID-19 related restrictions. The company trimmed the wages for salaried employees and postponed pay raises, bonuses, and promotions until the end of July when a performance review will be conducted.

In addition to the confrontation with health officials, the company was subject to two fresh federal safety investigations, one related to issues with vehicle displays and another associated with a cooling system in its older Model S vehicles over worries of fire hazards.

During the second quarter, in an attempt to boost sales, Tesla slashed the price of its electric vehicles in North America and China.  The company’s production facility in Shanghai has been reopened soon after a COVID-19 related shutdown. The company also recorded a rebound in China sales, with 11,095 Model 3s (made in Shanghai) delivered in May, as per data published by the China Passenger Car Association. The company refrained from providing specific production data related to Fremont or Shanghai assembly facility.

To a certain extent, analysts were anticipating Tesla to exceed or at least meet the Street forecasts for 2Q 2020 deliveries based on the email sent to Tesla employees by Elon Musk.

Following the upbeat delivery data, Wedbush Securities boosted the stock’s price target to $1,250, from $1,000 issued earlier. The equity research firm further stated that the prevailing bullish sentiment could even take the stock to a high of $2,000. Nevertheless, Wedbush maintains a “neutral” rating on the stock.

Ironically, Tesla, which sold 367,500 vehicles in 2019, commands a higher value ($224.17 billion) than Toyota ($174.21 billion). The Japanese automaker recorded sales of 10.74 million cars last year, roughly 29x higher than Tesla.

The stock, as shown in the price chart, is ascending after consolidating at $900 levels. Currently, the share price is trending in uncharted territory. The stochastic oscillator is also in the bullish zone. Therefore, we are anticipating further appreciation in the stock price.

tsl - technical analysis - 3rd July 2020

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.

Janine

Janine

Janine is our editor for related stock market news. Andrew and Janine will be focusing on providing the latest trends and where the next hit could be


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