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Tesla Deliveries Crushed Expectations. The Stock Should Move Higher.

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A Tesla Model Y car at a showroom in Beijing.
WANG ZHAO/AFP/Getty Images

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Electric-vehicle leader Tesla delivered a whopping 308,600 vehicles in the fourth quarter of 2021. That’s a record result and should be enough to keep the stock moving early in 2022.

Fourth-quarter deliveries grew 71% compared with the fourth quarter of 2020. For the full year, deliveries came in at around 936,000, up roughly 87% compared with the roughly 500,000 units delivered in 2020.

Tesla (ticker: TSLA) also produced 305,840 vehicles in the fourth quarter out of its two primary plants—in Fremont, Calif., and Shanghai—putting run-rate annual capacity at more than 1.2 million units from those two assembly plants. Early in 2022, Tesla will be starting up two more assembly facilities. One in Austin, Texas, and the other near Berlin, Germany.

It’s tough to call the direction of a stock over a given day or weekly period. But fourth-quarter results look solid. Wedbush analyst Dan Ives called the result a “trophy case quarter” for the company, adding, in a Sunday report, “with the chip shortage a major overhang on the auto space and logistical issues globally these delivery numbers were jaw dropping.”

Ives is a Tesla bull. He rates shares Buy and has a $1,400 price target for the stock. Tesla shares closed Friday at $1,056.78.

Bulls can expect a positive reaction in Monday trading. Typically for Tesla, strong deliveries lead to strong stock performance for the period between reporting deliveries and reporting earnings. Tesla stock has outperformed the S&P 500 in seven of the past nine periods between delivery results and financial results.

Tesla stock gained about 22% from Jan. 2, 2021, after Tesla reported fourth-quarter 2020 deliveries, to Jan. 27, 2021, the day it reported fourth-quarter 2020 earnings.

Tesla delivered about 181,000 vehicles in the fourth quarter of 2020. Wall Street was looking for about 176,000 vehicles to be delivered at the time of the release. The result was about a 3% beat versus expectations. This quarter, Wall Street was looking for, perhaps, 275,000 units. The reported result is more than 12% better than that. The highest FactSet estimate was 292,000.

Looking into 2022, Wall Street currently projects deliveries of about 1.4 million. That would be growth of about 50% compared with 2021. Tesla management has said its goal is to grow volumes at 50% a year on average for the foreseeable future. Given current production and coming new capacity, 1.4 million looks like a safe bet, as long as demand for EVs stays strong in the new year.

Tesla stock gained 50% in 2021, better than the 27% and 19% respective returns of the S&P 500 and Dow Jones Industrial Average. It was a solid result following on Tesla stock’s massive 743% gain in 2020.

Write to Al Root at [email protected]

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