Investor's Corner

Tesla increases Q2 production by 20% but falls short of deliveries

Tesla issued its Q2 production and delivery numbers, indicating that the company produced 20 percent more cars this quarter than the previous however fell short in delivering the vehicles to customers.

The Silicon Valley based electric car company reported 18,345 vehicles produced in Q2 or roughly just under 2,000 vehicles per week, and delivered 14,370 vehicles though guidance was set at 17,000 vehicles. Tesla attributed the fact that “Tesla Q2 deliveries were lower than anticipated” to having “5,150 customer-ordered vehicles [..] still in transit, a much higher number than the 2,615 vehicles in transit to customers at the end of Q1.”

Tesla added that half it saw a huge production ramp towards the end of Q2 resulting in half of the quarter’s production occurring in the final four weeks. Model S continues to lead in terms of deliveries consisting of 9,745 units delivered versus 4,625 Model X.


Tesla Q2 2016 Vehicle Production and Deliveries Release [Source: Tesla Investor Relations]

As far as total deliveries for the full year 2016, “Tesla expects to produce and deliver about 50,000 vehicles during the second half of 2016”, which means it will not be able to hit the low end of previous guidance of “80,000 to 90,000 new vehicles in 2016” as the projected 2016 yearly number for 2016 now stands at 79,000.

Tesla Market Action

During the past week $TSLA stock seems to have safely discarded the major bad news about the Model S driver killed while using Autopilot. While the press was flooded with negative articles about the accident (I counted an average of 2-4 articles per day in the Wall Street Journal and on Bloomberg), and the news ended up being reported 2 days in a row in the national news broadcast of all major networks, Wall Street traders shrugged the bad news off completely. While the stock had a temporary drop to 206 in after hours extended trading on Thursday when the news came up on the wire, $TSLA stock shot back with a vengeance to the $216 level on Friday, giving traders one of the best weeks of the year with a whopping 15% weekly gain.

What will $TSLA stock do when the market reopens on Tuesday after the 4th of July holiday? If we look at the response after the Q1 deliveries were reported on April 4, most news outlets reported that Tesla Missed Its Q1 Delivery Targets. Wall Street traders did not care much then, trading the stock up for 3 sessions to an all time high of $266 after the news. In that case, Tesla had reiterated the 80 to 90 thousand deliveries for the year, which may have softened the bad news of total quarterly deliveries.

This is a quick look to today’s headlines in response to the Q2 delivery numbers.

Technical indicators were in a really good spot at market close on Friday: 4-days of positive Heikin Ashi charts, MACD positive, MACD averages “pinching”, indication the possible start of a longer breakout on the upside. But the possible bullish breakout could be stopped by the market reaction to what is effectively a “miss” of guidance for the year, more than the smaller numbers for the quarter.

Will Wall Street traders shrug off the Q2 negative results like they did with Q1?

Source: Wall Street I/O

Source: Wall Street I/O

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