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Tesla shares hit three-month high as Wall St firm ups Model 3 delivery estimates

Tesla shares (NASDAQ:TSLA) are approaching a 3-month high amidst new, optimistic expectations from a Wall Street firm about the Model 3’s delivery figures for Q2 2018. After Tuesday’s opening bell, Tesla stock was trading up $2.52% at $340.18 per share, the first time the company’s shares have hit the ~$340 range since March 13, 2018. 

According to KeyBanc Capital Markets analyst Brad Erickson in a note to clients Monday, Tesla could positively surprise by delivering as much as 30,000 Model 3 for the second quarter. The Keybanc analyst further noted that the firm’s updated delivery estimates come from checks with Tesla’s sales centers.

“Our checks with sales centers indicate Model 3 deliveries are tracking ~50% higher than our prior estimates for the quarter, prompting us to raise our estimates. While the longer-term debate on TSLA remains more balanced … we maintain that evidence supporting the bear case is not likely to emerge in the near term, in our view,” the KeyBanc analyst wrote.

Tesla’s stock has seen an impressive recovery since the company held its 2018 Annual Shareholder Meeting, where CEO Elon Musk expressed an optimistic outlook about the production figures for the Model 3 and the ongoing expansion of Tesla’s energy business. Yesterday, Tesla’s momentum proved consistent, with shares rising an additional 4.55% to end the day’s trading at $332.10 per share amid CEO Elon Musk’s Twitter update about the first Full Self-Driving features for Tesla’s Hardware 2.0 fleet being released sometime in August as part of Software Version 9.

In his note, Erickson stated that his conversations with Tesla sales representatives in 20 stores revealed that delivery figures for Q2 2018 are pointing to numbers that are higher than his initial estimates, which stood at 20,000 Model 3 for the second quarter. Erickson also noted that he had increased Tesla’s full-year Model 3 delivery estimate from 98,182 to 118,182.

“We believe weekly run-rate volumes have moved from the high teens per store per week to the low 30s since our last checks in mid-April,” he wrote.

KeyBanc Capital Markets’ optimistic outlook on Tesla’s Model 3 performance this quarter comes as the latest vote of confidence for the Elon Musk-led company. Just yesterday, analysts from Berenberg raised its price target for Tesla to $500 per share, citing Tesla’s technological advantage over its competitors and a possible 25% gross margin for the Model 3.

After Tesla’s now-infamous Q1 2018 earnings call, Elon Musk predicted that the “short burn of the century” would be happening as the company starts achieving profitability. Last week alone, Tesla shorts lost $1.1 billion in mark-to-market losses on a single day as the company’s shares rose almost 9.7%. According to S3 Partners’ analyst S3 Partners’ Ihor DusaniwskyIhor Dusaniwsky, Tesla short-sellers are currently sitting on nearly $5 billion in mark-to-market losses since 2016, and this number could grow materially if the Elon Musk-led company can hold on to its current momentum.

According to a report from The Street, Tesla stock has already broken through the $310 resistance level, opening the door to more upside, and a test of the intermediate-term downtrend that identifies the top of Tesla’s correction up at $340 per share. If Tesla breaches the $340 mark, bulls can expect the ongoing uptrend to accelerate even more.

As of writing, Tesla stock is trading up $2.52% at $340.18 per share on Tuesday’s intraday.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours. 

Tesla shares hit three-month high as Wall St firm ups Model 3 delivery estimates
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