Tesla Analyst Sees 'Major Home Run' In Q2 Deliveries Despite Year-Over-Year Declines

Tesla Inc TSLA failed to sustain its 2019 performance level despite new contributions from its Shanghai factory and Model Y. The automaker’s second-quarter deliveries fell 4.8% year over year to about 90,650 units. Notably, the Street expected just 68,380.

“In our opinion, a 90,000 delivery number in this COVID lockdown environment is a jaw dropper and the bulls will run with this as a potential paradigm changer moving ahead,” Wedbush analyst Daniel Ives said in a note.

Loup Ventures noted that peer deliveries fell significantly more dramatically — General Motors Company GM dropped 34%, Toyota Motor Corp TM 35% and Fiat Chrysler Automobiles NV FCAU 39% — and Tesla’s numbers actually rose quarter-over-quarter despite 21 more days of factory shutdowns.

“June quarter deliveries are further evidence that Tesla has the auto industry backed into a corner,” Loup Ventures managing partner Gene Munster said in a note.

Analysts On Tesla's Global Performance

Wedbush, which maintained a Neutral rating on Tesla with a $1,250 price target, called the quarterly performance a “major home run” and honed in on strength in China.

“To this point, strong Model 3 demand out of China remains a ray of shining light (and we believe was a clear standout in 2Q) for Tesla in a dark global macro and appears to be on a run rate to hit 100,000 unit deliveries in the first year out of the gates for Giga 3 which is driving some strength for Tesla as well as Model Y deliveries starting to ramp as well,” Ives said. 

International sales drove a large portion of Tesla’s deliveries.

Based on the math from Tesla bear GLJ Research, Fremont deliveries declined about 37% year-over-year, and Models S and X deliveries fell 40%, although each surpassed consensus expectations. Founder Gordon Johnson emphasized the quarter’s implications for the achievement of annual guidance.

“Keep in mind, TSLA cut the price of its cars sharply several times in 2Q20, and this means they have to ship 160,700 cars in both 3Q20 and 4Q20 to hit their year-end 2020 guidance of 500K cars delivered,” the analyst said in a note. 

Tesla's Production

Tesla’s production fell from 102,672 in the first quarter to 82,272 in the second. Models 3 and Y made up 75,946 units compared to the previous quarter’s 87,282, while the S and X comprised 6,326 compared to the prior figure of 15,390.

Wedbush said the turnout was “impressive given the Fremont closure/stand-off during the quarter.”

Earnings Implications For Tesla 

The figures may help alleviate lingering bear concerns about Tesla’s sustainability, said Loup Venture's Munster. 

“Based on the just reported June quarter delivery numbers, we expect the company to report better than expected earnings, potentially near a profit despite the shutdown, and favorable details on continued profitability trends driven by the Shanghai factory and Model Y.”  

TSLA Price Action

Tesla shares were up 7.36% at $1,202.09 at the time of publication Thursday.

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Photo courtesy of Tesla.