Tesla TSLA said it delivered 95,200 cars in the quarter. Since there were around 10,600 cars in transit at the beginning and more than 7,400 in transit at the end (it won’t be providing these numbers going forward), actual deliveries were likely closer to 92,000, still above the Factset estimate of 91,000 for the June quarter.
Its second-quarter production of 87,048 was also better than the 77,100 produced in the first quarter as well as the fourth-quarter 2018 production of 86,555 vehicles.
The Model 3 remains the primary driver of sales, constituting 83.3% of production and 81.5% of deliveries this quarter.
The thing is that despite the strong numbers, deliveries through the first half of the year are around 158,200. The guidance of 380,000 to 400,000 for the year implies that deliveries through the first half should have been somewhere around 195,000 at the midpoint. It’s significant that Tesla hasn’t reiterated its 2019 guidance, despite posting strong numbers this quarter.
What management has said however that the streamlining of its global logistics framework is positively impacting numbers, which is a good thing, given the growing demand from international markets. Moreover, the resultant positive impact on cost and working capital will also help profitability, and therefore, the cash position.
Tesla also said that orders exceeded deliveries in the last quarter, which means that not all of the improvement is coming from pent-up demand, as some feared.
Given the upbeat management commentary, one does wonder though whether this growth will be sustainable going forward. In this context, executive turnover is the biggest concern. Whether Tesla comes out on top of all its challenges, whether it is able to maintain this level of momentum despite the high-level departures remains an open question. But going by the numbers, including the fact that it grew backlog, it’s probably okay to give it the benefit of the doubt.
Also keep in mind that the stock is heavily shorted, and if the positive news flow continues, especially following the earnings results, short sellers will be moving to close out their positions. So some upward movement in the share price would be inevitable.
Safer bets in the sector however are Ford F, Autobytel ABTL and PACCAR PCAR.
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