Tesla Stock: Will Record-Breaking Deliveries Be Enough to Power TSLA Stock?

Tesla Inc Will the Next Quarter Decide TSLA Stock's Fate
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Tesla Stock Recovery

Tesla Inc (NASDAQ:TSLA) has always been a tricky beast. Known for grandiose promises of world-changing technology, Tesla has also unfortunately been associated with over-ambition and near-impossible goals. As a result, we’ve seen TSLA stock suffer mightily in 2019. But that trend appears to be changing, and Tesla stock may be ready for a strong rebound in the coming months.

Before we get into why Tesla stock could be a great option right now, let’s discuss how it got into its current predicament.

Chart courtesy of StockCharts.com

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TSLA stock has plummeted 30% year-to-date, which has soured many on the company. That loss is especially egregious when consider just how much promise the company came into 2019 with; this was the year that the first ever affordable Tesla would be on the road, the “Model 3.” Going for $35,000, this was supposed the vehicle that turned everything around for the company. It was supposed to be the killer product that helped align Tesla with its high valuation and market cap.

The thing is, while sales have been strong, they still haven’t been up to the numbers that Tesla would need to justify its $40.0-billion valuation.

Of course, as is usually the case with Tesla, there are outside factors to consider. One is that the current presidency is, shall we say, less than enthusiastic when it comes to environmental concerns, meaning that mechanism like federal subsidies for non-carbon-emitting cars likely won’t be increased anytime soon.

A change in power could help push sales, and other political factors are still very much interwoven into the fabric of Tesla stock.

It’s easy to forget that the company is also still more than a car manufacturer. It makes solar panels and other green tech devices that could in the future–on a scale of years, not months–catapult it into a hugely profitable outfit.

But that is the long-term outlook; let’s refocus on the near-term outlook for Tesla Inc, which is quite strong. The company has already mounted something of a comeback, having gained nearly 20% over the last month. And Tesla’s most recent numbers may see those gains only continue to rise.

Chart courtesy of StockCharts.com

Tesla Stock Prediction

The electric vehicle maker was able to deliver a record number of cars in the second quarter of 2019. It produced 87,048 vehicles in the quarter, and delivered “approximately 95,200,” after having finished the first quarter of the year with some 10,000 cars listed as “in transit.” (Source: “Tesla rebounds from bad first quarter by setting new record for deliveries,” The Verge, July 2, 2019.)

The majority of cars produced (72,531) were Model 3s. The company also delivered more Model 3s than any other car in its fleet, hitting 77,550. (Source: “Tesla Q2 2019 Vehicle Production & Deliveries,” Tesla Inc, July 2, 2019.)

The numbers all were above industry analyst expectations, with many believing that delivery numbers would be closer to the previous quarter’s total of 91,000. The previous record high delivery came at the end of 2018.

Despite the good news, the company is undeniably in a period of flux. Three high-ranking executives have left in the span of a week.

The company also continues to bleed money, having posted a $702.0 million loss in the first quarter of 2019. The losses were largely due to poor delivery numbers as the Model 3 entered the Chinese and European market.

The company also notoriously cut seven percent of its workforce in January and announced a plan to close most of its stores, leading to more layoffs.

Investors, though, specifically institutional ones, typically like to see layoffs take place as it means a lower operating budget, so long as the layoffs don’t impact productivity and sales.

But the move ended up costing the company as it lost steam heading into 2019, with Wall Street bearish after Tesla’s previously impressive run of posting back-to-back profitable quarters.

The company was able to raise an additional $2.0 billion in funding, but that likely won’t be enough to save it from further cost-cutting measures.

And, as always, the company has to grapple with Elon Musk and his propensity for lofty promises, whether they are achievable or not.

Musk previously stated that Tesla would deliver 360,000 to 400,000 cars in 2019, but that goal is looking more and more like dreams rather than reality. The company has delivered fewer than 160,000 through the first half of the year. Tesla did not reiterate that annual guidance, as it did in its announcement of first-quarter deliveries. (Source: “Tesla stock surges after record quarterly deliveries, but there is still a long way to go,” MarketWatch, July 3, 2019.)

Overall, the numbers were strong and Tesla is trending in the right direction, but that’s still no certainty that TSLA stock is bound for a big recovery.

Having said that, I still see a lot of potential in Tesla stock. My Tesla stock prediction sees the company easily gaining another 20% before the end of the year, provided it can keep those delivery numbers high. It’s at a low point right now, which makes the upswing all the more likely. The only thing that has to happen now is for Tesla to keep those sales moving.

We’ll be seeing the full earnings report in August from Tesla and that will certainly shape the near future of TSLA stock. If the company is able to keep losses down and potentially even score another profitable quarter, than share prices will rise as a result.

Analyst Take

When it comes to the Tesla stock prediction, it’s never an easy, cut-and-dry situation. There is always a bevy of a factors to consider when we look into the future of the company.

Right now, however, it is trading a relative low-point. As such, it is primed to see a massive rebound if it can generate some goodwill among investors. A record number of cars shipped alongside a solid earnings report that shows profitability could be just what TSLA stock needs to see a surge in the coming months.

For those who are considering whether investing into TSLA stock would be a good idea or not, the next quarterly report will go a long way towards winning over investors if it can prove positive.