(Bloomberg) -- Tesla (NASDAQ:TSLA) Inc. surprised Wall Street with record second-quarter deliveries that beat estimates, boosting confidence about demand for the company’s electric cars after a tough year so far for the shares.
“While there were a good amount of ‘leaked’ emails and reports prophesizing a potential ‘record quarter’ for deliveries, we had not spoken to any investors that expected deliveries to be this high,” Morgan Stanley (NYSE:MS) analyst Adam Jonas wrote in a note. “We expect the stock to squeeze and then fade on this news.”
Tesla shares gained 7.1% in U.S. post-market trading. They have fallen 33% this year amid concerns about demand and worries that the cheaper Model 3 is cannibalizing the company’s more lucrative vehicles.
Here’s a round-up of what analysts are saying:
Morgan Stanley, Adam Jonas
(Equalweight, PT $230)
- It isn’t clear how much of the beat was due to underlying demand, more attractive pricing, sales bonuses or pull-forward from 3Q after tax credit reduction.
- Based on YTD deliveries, if Tesla achieves 95k units in 3Q and 4Q it would take them to about 350k units for 2019, just shy of guidance of 360k-400k units.
- Suggest investors get ready for a bounce, but don’t expect to see bears on the name capitulate; concerns about sustainable demand, competition and risks in China will weigh on stock.
Goldman Sachs (NYSE:GS), David Tamberrino and Mariel Kennedy
(Sell, PT $158)
- 2Q deliveries and order flow were helped by release of Tesla’s Standard Model 3 variant, right-hand drive Model 3s and the upcoming phasing out of U.S. tax incentives.
- Expects “sequential” stepdown in demand in 3Q.
- Says move to offering a lower-priced Standard Model 3 variant and leasing option could have negative impacts on Model 3 program gross margins and FCF generation.
Loup Ventures, Gene Munster
- Deliveries “mark a turning point for underlying demand” and the record-high Model 3 production and deliveries should largely put an end to fears about weak demand.
- Expect the company to reiterate its target of a minimum of 360k deliveries for 2019, while investor expectations are around 300k. Tesla should “comfortably exceed” that.
Wedbush Securities, Daniel Ives
(Neutral, PT $230 PT)
- Strong 2Q delivery numbers “a clear step in the right direction” and will help restore credibility to CEO Elon Musk’s story.
- The most important number in the release was the key Model 3 deliveries, which came in above the Street’s 74,100 estimate, as this remains the linchpin of the Tesla growth story for coming years.