Tesla shares surge after Model 3 production update and record deliveries

Tesla’s stocks (NASDAQ: TSLA) are bouncing back after the company released its first quarter production and delivery report, which listed a 40% increase in production from Q4 2017. Tesla also announced that the rate of Model 3 production during the last seven days of March hit 2,020 a week — a fourfold increase over the past quarter. 

Deliveries hit new levels as well, with Tesla delivering 29,980 vehicles in total during the first quarter. Among this number, 11,730 were Model S, 10,070 were Model X, and 8,180 were Model 3. By the end of the first quarter, 2,040 Model 3 and 4,060 Model S and X were in transit to customers.

Tesla’s first quarter report affirmed the company’s target of producing 5,000 Model 3 a week by the end of Q2. The California-based electric car maker and energy company also announced that is not requiring an equity or debt raise this year, apart from standard credit lines.

Overall, signs of recovery from Tesla’s stocks were evident during pre-hours trading on Tuesday. Before markets opened, Tesla’s shares rose 6.5% to $268.49.

Tesla’s surge on Tuesday was foreshadowed by several analysts on Monday. Even amidst Tesla’s plunge yesterday, global investment banking firm Jefferies LLC upgraded $TSLA to Hold (PT $250), according to a tweet from CNBC journalist Phil LeBeau. According to Jefferies, there is a “high probability that management and the (Tesla) Board will take more drastic action on guidance and funding to restore credibility” after the company releases its Q1 2018 production numbers.

Jefferies upgrades $TSLA to hold (PT $250) saying after Tesla posts Q1 Production #'s there is "high probability that management and the Board will take more drastic action on guidance and funding to restore credibility."

— Phil LeBeau (@Lebeaucarnews) April 2, 2018

Baird analyst Ben Kallo also maintained his Outperform rating on Tesla stocks. According to the analyst, Tesla might be able to exceed the lowered expectations for the past quarter.

“While it seems a perfect storm is weighing on the shares, we are buyers into pressure as Model 3 production ramps. We like the set-up headed into Q1 deliveries as we believe sentiment is overly negative, and think Tesla may be able to exceed lower expectations,” Kallo wrote.

Consumer Edge Research Senior Analyst Jamie Albertine also expressed his optimistic expectations for the Elon Musk-led company. In a statement to CNBC News, Albertine stated that if Tesla can make progress with the production ramp-up of the Model 3, the company might have “a very good year” overall.

“This is the most highly contested, I guess, debate of any company that I cover in the auto industry. It’s one of the most highly-debated technology stocks out there. Shorts are, they’re well aware that there is this catalyst coming that might actually be positive. So it’s no surprise that all this negative news is sort of swarming ahead of that potential catalyst. And when you look at it, the Model 3 determines their cash need, period.

“So if they’re on track, even 2,500 units per week within the next few weeks or months still puts them relatively close to their initial guide and well on the way of being cash flow sufficient by means of the Model 3. This reduces the need for them to go back to the market… The story really hinges on the Model 3. That will really cure a lot of these cash questions, and I think they’re gonna have a very good year.”

Tesla’s milestone of producing 2,020 Model 3 in a week was the result of the company’s efforts to ramp-up production during the quarter. As we noted in a previous report, Tesla temporarily shut down the Model 3 line back in February to address bottlenecks and improve its automation systems. A limited number of workers from the Model S and Model X lines were also given the opportunity to help out the Model 3 line during the final week of March.

Tesla shares are currently bouncing back on Tuesday, trading up 4.27% to $263.32 per share as of writing.