Tesla Stock Above Early Buy Point With Q2 Deliveries On Tap

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Tesla (TSLA) is expected to report second-quarter delivery numbers in the coming days, amid a global chip shortage and growing EV competition. Tesla stock fell slightly Wednesday.




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Wall Street analysts expect deliveries of 196,700 vehicles, according to FactSet. That would be a 6.4% increase from the last quarter and more than double the year-ago figure of 90,900, when the Fremont, Calif., plant was closed for much of the quarter. FactSet estimates Tesla will deliver 193,500 Model 3/Y cars and 3,200 Model S/X vehicles.

The high end of Wall Street estimates is for deliveries of around 200,000, while the bearish view is for about 175,000.

Tesla Begins Long-Delayed Deliveries 

Tesla this month began long-delayed deliveries of the Model S Plaid, the revamped version of the luxury sedan, but those weren't expected to ramp up quickly. There's no word on when the Model X Plaid will officially launch.

RBC Capital analysts led by Joseph Spak forecast deliveries of about 195,000, “just shy of the 200,000 bogey,” they said in a June 28 report. That figure would represent a 115% year-over-year increase and 6% from the previous quarter. Spak raised his estimate from 177,000 following Tesla's first-quarter earnings report. RBC estimates Tesla will deliver 193,600 Model 3/Ys and only 1,500 Model S/Xs.

Spak sees 72,500 of those coming from the U.S. and 63,607 from China. Europe is expected to account for 35,000 deliveries. Canada and the rest of the world should account for the balance of 24,000.

“Eyes will be on Tesla's production too, which we believe will fall below 2Q21 deliveries owing to global semi shortage, so Tesla likely drew down on some inventory this quarter,” Spak wrote.

RBC rates Tesla as a Sector Perform, which means returns are expected to be in line with the sector average over 12 months. It has a price target of 725.

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Meanwhile, China-based rivals Nio (NIO) and Xpeng (XPEV) reported strong Q2 deliveries Thursday. Nio's Q2 deliveries surged 112% to 21,896 electric SUVs. Xpeng Q2 deliveries shot up 439% vs. a year earlier to 17,398.

Li Auto (LI) is also expected to report Q2 deliveries soon. Li Auto is optimistic second-quarter deliveries will top guidance of 14,500-15,500, despite a chip shortage affecting the entire industry.

Tesla Stock

Shares slipped o.26% to 677.92 in Thursday's stock market trading. Tesla stock has paused for a few sessions after clearing an aggressive trend line that offered an early entry around 675, according to MarketSmith chart analysis. Shares recently popped above the 10-week line, an encouraging sign. The buy zone extends to 708.75.

Investors also could view 780.89 as another early entry, just above the April short-term peak.

Shares are still about 25% below their all-time high of 900.40, achieved on Jan. 25. But Tesla's relative strength line is trending upward. It has an RS Rating of 87 out of a possible 99. Tesla is a Leaderboard stock.

Among other EV stocks, Nio stock fell 4.3%, Xpeng dipped up 1.7% and Li Auto edged lower 0.7%.

Nio, Xpeng and Li Auto stocks have rebounded more than Tesla stock, but they also sold off much more than the global EV leader.


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Tesla Earnings Next

RBC's Spak says after the deliveries report the focus will shift to Tesla's Q2 earnings. That will likely come in late July.

“When Tesla reports, focus will likely be on usual financial items (gross margins, cash flow) and future developments (capacity build-outs, battery technology, FSD updates etc.),” he wrote.

FactSet consensus sees EPS of 95 cents on sales of $11.32 billion. Tesla has an EPS Rating of 74.

Spak says he's looking for Tesla to update investors on how the chip shortage is impacting production.

China demand will also be a key area of interest. Tesla is dealing with consumer complaints and recalls, heavily covered in state and social media there. It's unclear how much those recent public relations woes are affecting Tesla sales in China.

“Our view is demand improved sequentially during quarter,” he wrote. But Spak added that the recent Tesla recall of approximately 300,000 Model 3/Y vehicles for issues related to its assisted-driving system “could negatively impact perception.”

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.

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