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Tesla Rallies as Elon Musk Keeps His Promise of a Record Q2


Jul. 3 2019, Updated 11:03 a.m. ET

Tesla’s second-quarter deliveries

After the market closed on July 2, Tesla (TSLA) pleasantly surprised investors by reporting second-quarter car deliveries that were much better than expected. In the quarter, the company delivered 95,200 car units to its customers, 133.5% higher than its 40,768 car deliveries in the quarter that ended in June 2018. Its second-quarter car deliveries also reflected a solid 51.1% sequential increase.

These were the highest quarterly car delivery figures for Tesla, and they were much better than analysts’ estimate of 91,000 units, according to FactSet data.

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Car production also improved

In the second quarter, the company produced 87,048 total car units, up 63.2% YoY (year-over-year) and 12.8% sequentially. This total car production figure included 14,163 units of the Models S and X and 62,975 units of the Model 3.

With this, quarterly car production at Tesla reached its highest level ever in the quarter.

Tesla stock rallies

At 7:30 AM ET on July 3, Tesla stock was up 7.6% for the day at $241.60 in the premarket session after its strong YoY and sequential car delivery growth rate boosted investors’ confidence.

The Elon Musk–led company has faced a storm of negativity in the recent months after some Tesla bears pointed out a demand problem for Tesla cars. These negative reports took a heavy toll on investors’ sentiments and drove Tesla stock down 14.7% in April and 22.4% in May.

Tesla critics’ claims came after the company’s total car deliveries fell 30.7% and its car production dropped 10.9% sequentially in the first quarter. TSLA delivered 63,019 car units in the first quarter, and its car production figure stood at 77,138 units.

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Musk kept his promises

After hearing about all the negative media reports at the time, Musk publicly denied the demand problem for Tesla cars during the company’s 2019 annual shareholders meeting on June 11. During the event, Musk said, “I want it clear: there is not a demand problem, okay? Absolutely none. The sales are—have far exceeded production, and production’s been pretty good.”

He added that Tesla has “a decent shot at a record quarter on every level. If not, it’s going to be very close, but we’ve got a shot at a record quarter.”

The company’s solid second-quarter car deliveries and production seem to have proved Musk right against Tesla bears’ claims about a demand problem.

Will Tesla stock continue rising?

Since mid-June, Tesla stock has faced strong resistance near the $230 level, near its 50-day simple moving average. In the premarket session on July 3, the stock had already risen far above this resistance, which should attract renewed buying.

The stock’s prior resistance level of near $230 should now act as an immediate horizontal support for it in the coming sessions. Any drop toward this level could be considered a good buying opportunity for the short term. On the upside, Tesla stock is likely to face its next resistance near $252.


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