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Can Tesla Keep Shining in 2Q17?

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Dec. 4 2020, Updated 10:52 a.m. ET

Tesla stock

In 1Q17, Tesla (TSLA) stock delivered an impressive return of ~30%. After struggling for the previous six quarters, Tesla appears to have stepped into glory in the first quarter of 2017.

Last week (ended April 7), Tesla stock continued its upward journey, ending the week with an ~8.7% gain. Below, we’ll look at some key reasons behind Tesla’s stock rally last week.

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Key positive factors

On April 2, Tesla reported its 1Q17 vehicle deliveries and production numbers. The company’s car deliveries in the first quarter jumped by about 69% on a YoY (year-over-year) basis to ~25,000 car units.

Similarly, Tesla’s 1Q17 vehicle production figure stood firm at 25,418 units, which reflected a YoY rise of about 64%. Tesla thus exceeded the analyst estimates for 1Q17 vehicle production and deliveries. These stronger-than-expected production and delivery figures could be the primary reason for the recent rally in Tesla stock.

Tesla plans to start building ~500,000 vehicle units per year from 2018, and any significant increase in vehicle production numbers should boost investor confidence in the company’s ability to reach its massive 2018 targets. In 1Q17, Tesla began ramping up its Fremont, California, facility to support Model 3 production, scheduled for later this year.

Interestingly, after Tesla’s Model 3 announcement last year, automakers (XLY) General Motors (GM), Ford Motor (F), and Honda Motor (HMC) all ramped up their electric vehicle development programs.

What to expect in 2Q17?

On April 7, Tesla stock closed at $302.54—not far from its all-time high of $304.81. A breach above $304.88 level could attract fresh buying in the stock this week. On the downside, the stock’s important horizontal support lies near $287 level.

To be sure, the company’s 1Q results should play an important role in deciding the short-term direction for the stock, and investors could become cautious ahead of Tesla’s 1Q17 results in the coming weeks.

You can read Market Realist’s series Autonomous Vehicles: Latest Updates in 2017 to learn about automakers’ and tech companies’ efforts to make autonomous vehicles a reality.

In the meantime, keep checking in with Market Realist’s Autos page for ongoing updates.

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