Investor's Corner
Tesla (TSLA) Q2 2019 production and delivery report: What Wall St analysts are saying
Tesla stock (NASDAQ: TSLA) is surging on Wednesday on the heels of the release of the company’s Q2 2019 delivery and production report. With deliveries and production far exceeding forecasts from Wall St, several analysts have weighed in on the electric car maker’s record-setting quarter, which saw Tesla producing a total of 87,048 vehicles, comprised of 14,517 Model S and Model X, and 72,531 Model 3; and delivering a total of 95,200 cars, comprised of 17,650 Model S and X and 77,550 Model 3.
Morgan Stanley analyst Adam Jonas, who quoted a “worst case” $10 price target on TSLA stock back in May, admitted that despite the number of leaked Elon Musk emails and reports pointing to a record quarter, Tesla’s over 95,000 vehicle deliveries were unexpected. “We had not spoken to any investors that expected deliveries to be this high. We expect the stock to squeeze and then fade on this news,” Jonas wrote in a note. Nevertheless, the analyst still pointed out that continued concerns about “sustainable” demand and competition in regions such as China would likely weigh down the stock.
“It isn’t clear how much of the beat was due to underlying demand, more attractive pricing, sales bonuses, or pull-forward from (the) third quarter after tax credit reduction. Based on year-to-date deliveries, if Tesla achieves 95,000 units in the third and fourth quarters, it would take them to about 350,000 units for 2019, just shy of guidance of 360,000-400,000 units,” Jonas, who currently has an Equalweight rating on Tesla stock with a price target of $230 per share, noted.
Nomura analyst Christopher Eberle, who has a Neutral rating and a $300 price target for TSLA, also weighed in on the electric car maker’s Q2 results. “Tesla noted that orders generated during the quarter exceeded deliveries, implying the company enters 3Q19 with an increase in its backlog,” he stated. Eberle remained cautious, adjusting his third-quarter delivery estimate by just 5% to 80,000 units.
Joseph Osha of JMP Securities, who maintains a Market Perform rating and a $347 price target on the electric car maker, stated that he expects to see Tesla’s cash balance rise to $2.67 billion in the second quarter. Osha also argued that the second quarter results prove that the company’s lower-than-expected first quarter figures were not an indicator of real end demand in the United States. “Overall, the message we hear is that Tesla’s weak first quarter was not, in fact, an indicator of real end demand in the U.S. market. The combination of U.S. demand and export volume appears sufficient to support an outlook of ~380,000 deliveries this year, and our outlook for the second half of the year remains unchanged,” the analyst stated.
Wedbush Securities analyst Daniel Ives, who has a Neutral rating and a $230 price target on Tesla stock, noted that the company’s strong Q2 delivery numbers were “a clear step in the right direction,” which could help restore the credibility of Elon Musk’s story. Ives was among the most vocal critics of Tesla following its first-quarter results, at one point calling Q1’s results “one of (the) top debacles we have ever seen.” Ives also mocked Tesla for maintaining its optimistic forecast for the rest of 2019, stating that “Musk & Co., in an episode out of the Twilight Zone, act as if demand and profitability will magically return to the Tesla story.” Prior to the release of Tesla’s Q2 2019 production and delivery report, Ives expected the company to deliver 84,001 vehicles.
Goldman Sachs analyst David Tamberrino, one of TSLA’s most ardent critics who currently has a Sell rating and a $158 price target on the electric car maker, stood by his pessimistic outlook on the company. Tamberrino stated that “second-quarter deliveries and order flow were helped by the release of Tesla’s Standard Model 3 variant, right-hand drive Model 3s and the upcoming phasing out of U.S. tax incentives.” The Goldman Sachs analyst also expects a “sequential” stepdown in demand in the third quarter, on account of Tesla’s decision to offer lower-priced Model 3 variants and a leasing option, which he notes could have negative impacts on the vehicle’s gross margins and FCF generation. Interestingly, Tamberrino expected Tesla to deliver 91,124 vehicles in the second quarter (one of the highest on Wall Street, exceeding even that of Tesla bull and Baird analyst Ben Kallo), which is quite ironic considering his constant pessimistic stance against the electric car maker. Goldman Sachs’ investment bank is also among TSLA’s prominent shareholders.
As of writing, Tesla stock is trading +6.13% at $238.31 per share.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
Tesla aims to combat common Full Self-Driving problem with new patent
Delaware Supreme Court reinstates Elon Musk’s 2018 Tesla CEO pay package
