Tesla surges on record Q2 deliveries—here’s what experts are watching now

Tesla is on a tear.

Shares of the electric automaker surged 6% on Wednesday after the company reported record production and delivery numbers for its second quarter, with some calling the report an “impressive” departure from its recent struggles.

With the stock still down nearly 30% year to date, experts are starting to perk up, but many remain cautious, saying they need to see Tesla’s next earnings report before getting more bullish.

Here’s what experts are saying about the report:

Longtime auto executive Jim Press, formerly of Chrysler and Toyota, said Tesla’s better-than-expected results are a good sign for the electric vehicle industry:

“I think the demand was there. I think a lot of this quarter was really done by stoking up production. They had unfilled orders, especially outside of the United States. The Model 3 filled a lot of that production need. They may have sacrificed some potential of the higher-margin, other vehicles. We’ll have to see. It does show well, and boy, I’ll tell you what: the green car industry itself is doing very well now compared to what it has been doing. All the major manufacturers are really getting their product development on EVs ready, as well as hybrids and the fuel cell cars. The green car market is not just in California, it’s beginning to expand beyond, and if you look at Tesla’s production, half of their sales up to the beginning of this year [had] been in the state of California. A lot of this growth now for them is outside of California and that shows the demand is growing for green vehicles throughout the country and, actually, in other markets as well outside the United States.”

Loup Ventures Managing Partner Gene Munster saw the upside surprise as “a powerful step forward” for the company:

“The whisper numbers were much lower than what they actually reported. So, this was entrenched, I think, in Street thinking that it’s hard to pick what the underlying demand is. And I would point to two numbers: in the December quarter, they peaked Model 3 at 63,000 deliveries. [This quarter,] they did 77,000. It went down in March, and now its gone up to 77,000. There [were] more headwinds than tailwinds in the June quarter. … If you take that, maybe the base case that there [were] equal head- and tailwinds for the June quarter, and they stepped up from the peak Model 3 quarter, and they have greater demand, or at least the backlog is greater that they entered, I think the case is powerful that there is something bigger going on here. Electric cars are undoubtedly the future, and so I see this as a powerful step forward. The company is far from perfect. … As someone who supports this story, I’m most concerned about … management departures. I’m most concerned about that, but that said, I think it’s focusing on too much of the details. The big picture is pretty simple, is that this current demand is not about pent-up demand for Model 3.”

Dan Ives, managing director of equity research at Wedbush Securities, said his firm was keeping its powder dry for now:

“No doubt, this is a step in the right direction for [CEO Elon] Musk and Tesla, and you’ve got to give them credit. This is a strong rebound from [the first quarter] in terms of unit numbers of Model 3. The big question is second-half numbers and profitability, and that, in our opinion, is where there’s more wood to chop here. So, no doubt positive here, [but] questions remain. … Obviously, we have to see earnings in a few weeks, but, ultimately, does that mean you’ll have orders and deliveries up in [the third quarter] and ultimately into [the fourth quarter]? That’s where they’re trying to say that they can hit their numbers. We continue to think that they’ll rip the [bandage] off and ultimately have to lower those targets over the course of the next few quarters. But this company had its back against the wall. You’ve got to give Musk and Tesla major credit here for what they did in the quarter. The bulls win this battle right now, and I think, obviously, you’ll see the stock up significantly [on Wednesday] as the shorts have to go back into their caves and hibernate. “


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