Tesla Stock Jumps After First-Quarter Delivery Beat
Tesla Inc (NASDAQ:TSLA) stock jumped in premarket trading after the automaker reported better-than-expected delivery numbers for the first quarter. The company reported on Friday that it delivered 184,800 vehicles and produced 180,338 Model 3s and Model Ys during the quarter. Analysts had been expecting only 168,000 deliveries, according to FactSet.
Q4 2020 hedge fund letters, conferences and more
Tesla has another record-breaking quarter
Tesla also beat its fourth-quarter number, setting a new record. It delivered 180,570 vehicles during the fourth quarter, and the first-quarter delivery number was a more than 100% increase from the year-ago quarter. The automaker delivered 182,780 Model 3s and Model Ys and 2,020 Model S and Model X vehicles.
In a note over the weekend, Wedbush analyst Daniel Ives upgraded the automaker to Outperform and boosted his base case target price from $950 to $1,000 and raised his bull case price target to $1,300. He believes the first-quarter delivery numbers demonstrate pent-up demand for the Model 3 and Model Y and that the vehicles are hitting their "next stage of growth as part of a global green tidal wave."
Ives now believes Tesla could deliver more than 850,000 vehicles this year with 900,000 as a "stretch goal," despite the chip shortage and a variety of supply chain problems across the industry. The company delivered 499,550 vehicles in 2020, so if it delivers more than 850,000 this year, it will beat last year's record by over 70%.
New catalyst
Ives added that Tesla has a new catalyst that could drive even more growth, which is President Joe Biden's green energy push. The current tax credit for electric vehicles is $7,500, but that phases out after an automaker sells 200,000 EVs. Tesla and General Motors Company (NYSE:GM) have both gone past that level, which eliminated the tax credit on their vehicles.
However, Ives believes the dynamic will change soon "in a big way for Tesla" because he expects lawmakers to remove the ceiling on the EV tax credits as part of the $2.3 trillion infrastructure plan pushed by Biden. In addition to removing the ceiling, the analyst thinks lawmakers could boost the tax credit from $7,500 to $10,000 to drive demand for EVs among consumers.
Ives thinks Tesla is in the best position to take advantage of the growth in the electric vehicle market. EVs represent only 3% of vehicle sales now, but Ives believes their share could jump to 10% by 2025 "as the auto sector is transformed green over the coming years."
Tesla stock jumps in early trading
Tesla stock jumped by about 6% early this morning, putting it on track to flip into positive territory for the year. It's been a difficult year for the shares, which have been in the red until now.
Tesla is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders' families.
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