A leaked email is fueling a mini-rally in shares of electric vehicle pioneer Tesla Monday, pushing shares of the EV pioneer back above $1,000 to close at a record high.
Electrek reported that Tesla (ticker: TSLA) CEO Elon Musk wrote to employees: “Breaking even is looking super tight. Really makes a difference for every car you build and deliver. Please go all out to ensure victory!”
For investors, breaking even is a great result for a quarter marred by global pandemic, plant shutdowns and falling demand for all cars. Wall Street expects Tesla to lose about $1.16 a share in the second quarter.
Tesla deliveries, before Covd-19, second-quarter earnings were expected to be almost $2 a share. What’s more, vehicles deliveries were expected to be roughly 125,000 units in the second quarter. Delivery estimates fell to less than 70,000 as the quarter unfolded. The average analyst delivery estimate is back up to about 72,000 vehicles.
“Amid reports of a robust June, Tesla [second-quarter] deliveries may be in the range of 90,000 to 100,000 units, ahead of sell-side and buy-side consensus,” wrote Credit Suisse analyst Dan Levy in a Monday research report, adding a second-quarter profit no longer appeared as a “radical idea.”
The buy-side refers to Levy’s clients. They buy his research. The sell-side refers to Levy’s Wall Street analyst peers. Levy rates shares the equivalent of Hold and has a $700 price target for shares.
Tesla needs to post earnings of no worse than $1.41 a share in the second quarter to qualify for inclusion in the S&P 500. One of the criteria for inclusion into the index is positive GAAP earnings.
GAAP is short for generally accepted accounting principles. Tesla has earned $1.42 in diluted GAAP earnings per share over the past three quarters.
Another general rule for inclusion is positive earnings in the most recent quarter. It isn’t an absolute rule. The S&P 500 Index committee has discretion. The S&P didn’t say if the pandemic would factor into a Tesla index inclusion decision.
Inclusion in the S&P 500 might push shares higher into, and after, the second quarter Tesla delivery report, due in coming days. S&P 500 index funds might start to prepare for index inclusion if deliveries beat estimates. The magnitude of any bump from technical factors such as index inclusion are tough to size.
Tesla not being in the index is, frankly, a little odd. It’s the second-largest car company in the world by market capitalization, trailing only Toyota Motor (TM).
Tesla’s $187 billion market cap would put it in the top 30 stocks in the S&P 500. It would also rank about 17th in the Dow Jones Industrial Average.
Tesla stock gained 7% to $1,079.81, an all-time high, on Tuesday, putting it up 158% in 2020. Shares are flat in premarket trading Wednesday.