On Tuesday, RBC (TSX:RY) Capital maintained its Outperform rating and $227.00 stock price target for Tesla (NASDAQ:TSLA), highlighting the electric vehicle company's improved delivery numbers in the United States for June.
The deliveries, which are believed to have increased to approximately 70,000, surpass the firm's conservative estimate of 55,000 for the month. This uptick is supported by app download data, suggesting a recovery from April's 47,000 and May's 52,000 deliveries.
In Europe, Tesla's June deliveries are estimated at 36,000, a significant rise from the 14,000 and 19,000 reported in April and May, respectively. The figures align with app download trends and RBC's own forecasts. Conversely, in China, Tesla's June deliveries reached 71,000, as reported by the China Passenger Car Association (CPCA).
This number, while higher than the previous two months' figures of 31,000 and 55,000, fell short of RBC's estimate of 81,000. Notably, app data for China suggested a lower June delivery number of 43,000, indicating that the actual performance exceeded some expectations.
The first quarter of 2024 posed unique challenges for Tesla, including a demand shift into the fourth quarter of 2023 due to the expiry of the Inflation Reduction Act credit for the Model 3 Standard, the initial phase of the updated Model 3's production ramp-up, factory shutdowns resulting from shipping diversions during the Red Sea (NYSE:SE) conflict, and an arson attack at Tesla's Gigafactory Berlin.
Despite these events, Tesla's quarter-over-quarter performance saw a 14.8% increase, which RBC deemed understandable.
Year-over-year comparisons for the second quarter of 2024 showed declines, which were anticipated by market analysts, given Tesla's position amidst two waves of growth. The anticipation of new, more affordable Tesla models expected in the first half of 2025 may also be causing potential buyers to delay their purchases.
The analyst suggested that Tesla's stock might see an uptick due to the better-than-expected delivery numbers, but this could be temporary as the market is now looking forward to the robotaxi reveal on August 8.
The event is expected to provide a high-level overview, and RBC does not anticipate it to serve as a significant catalyst for the stock in the near term. Still, the firm remains optimistic about the long-term prospects of robotaxis and Tesla's role in this emerging market.
Additionally, RBC pointed out Tesla's exceptional performance in Energy Storage during the second quarter of 2024, indicating possible market share gains. The firm places more value on this segment of Tesla's business than on the car division, citing a potential total addressable market for battery storage that is 20 times its 2023 levels at maturity and already more profitable than Tesla's Car business.
In other recent news, Tesla's second-quarter vehicle deliveries exceeded market expectations, with a total of 443,956 units delivered, marking a 14.8% increase from the first quarter. The rise is attributed to pricing adjustments that have stimulated customer demand.
Still, Tesla's sales of electric vehicles manufactured in China experienced a significant 24.2% decline year-over-year in June. Meanwhile, electric vehicle manufacturer Polestar (NASDAQ:PSNY) reported a first-quarter operating loss of $231.7 million due to significant tariffs on its China-produced EVs. The company plans to adjust its production strategy to lessen its dependency on Chinese manufacturing.
On the other hand, Chinese automaker BYD (SZ:002594) reported a substantial 21% increase in its EV sales for the second quarter, signaling a tightening race with Tesla. Citi has maintained a neutral rating on Tesla, with a steady price target of $182.00.
The firm anticipates a favorable reaction in the stock price following Tesla's delivery and production report. Investors are expected to shift their attention towards Tesla's second-quarter auto gross margins, due to be reported on July 23. These are some of the recent developments in the EV sector.
InvestingPro Insights
As Tesla (NASDAQ:TSLA) continues to navigate through a landscape of challenges and opportunities, real-time data and insights from InvestingPro can provide investors with a deeper understanding of the company's financial health and market position.
With a robust market capitalization of $731.06 billion, Tesla's financials reflect its significant scale in the industry. The company's P/E ratio, sitting at 53.37, indicates a high valuation by the market, which may be justified by its growth prospects and industry leadership. Still, the PEG ratio of 3.1 suggests that this growth may be priced in, warranting careful consideration by investors.
Delving into performance metrics, Tesla has experienced notable returns, with a 12.01% increase over the last week, complementing the strong return over the past three months of 25.94%. This momentum is a testament to Tesla's ability to generate investor enthusiasm, despite recent volatility. Moreover, the company's gross profit margins, at 17.78%, could signal potential areas for efficiency improvements.
An InvestingPro Tip worth highlighting is Tesla's position as a prominent player in the Automobiles industry, which aligns with RBC's positive outlook on the company's long-term prospects, particularly in the Energy Storage segment. Meanwhile, another tip points out that Tesla holds more cash than debt on its balance sheet, providing it with a solid financial footing to weather economic uncertainties and invest in future growth initiatives.
For investors seeking more in-depth analysis, there are over 20 additional InvestingPro Tips available for Tesla, which can be accessed through InvestingPro's platform. To enhance your investment research experience, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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