Tesla, Inc. TSLA reported on Tuesday above-consensus shipments for the second quarter, sending its stock up more than 10% to its highest level in nearly six months. Analysts and fund managers weighed in on the report to decipher what led to its outperformance and sustainability.
Munster admits the mistake: “Mea culpa,” said the Deepwater Asset Management Partner Gene Munster in a post. Despite a nearly 5% year-over-year sales decline, the stock rose notably as the year-over-year decline rate improved from 9% in the March quarter to 5% in the June quarter, he said.
An improvement may have helped Tesla in demand as the sales beat came despite lighter discounts in the June quarter compared to the March and December quarters, the fund manager said.
Munster expects supplies to return to growth in the September quarter, with growth likely to accelerate in the December quarter.
The technology analyst said that on August 8 robotaxis the discovery will have a significant impact. The timing and pricing of the three new vehicles will continue to add buzz over the next year, he said. He sees the company returning to 20% growth in calendar year 2026.
Black looks at low financing options: Strong shipments boost chances Tesla will extend favorable low-interest financing into third quarter, Future Fund said Gary Black. The company would likely prefer that option over additional price cuts, he said.
The big upside, according to the fund manager, is the huge drawdown of inventory, with about 33,000 depleted units in the US alone.
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It’s the worst after Tesla, Gerber Questions: Breaking down the results, Geber Kawasaki Wealth and Investment Management CEO, Ross Gerber agreed with others on the role of low financing offers in the pace of shipments. The electric vehicle maker sold inventory and cut production to boost cash flow in the quarter, it said. But he was skeptical about the impact of the margin of action.
“But it’s the worst after Tesla…,” he asked.
Referring to the second consecutive quarter of declining sales, Gerber said, the company appears to be capitulating to the idea of selling EVs. “Now it’s about FSD and taxis,” he said. But full self-driving software still has many problems, and the Cybertruck doesn’t have the software yet, he added.
The fund manager said he liked Tesla’s energy storage and charging businesses.
Wells Fargo was unimpressed: Wells Fargo Analyst Colin Langan, who has an underweight rating on Tesla shares, said the second-quarter shipment update did nothing to change his investment thesis. In an interview with CNBC, the analyst said the high performance was largely due to Tesla’s “huge financial incentives.”
“That’s the traditional automotive story – Lower the price, drive volume,” he said. But the price cuts are not driving volume, he added. As much as Tesla grows in the second half, valuations still need to fall, the analyst said.
Early Independence Day for Tesla, analyst says: Morgan Stanley’s Adam Jonas said the second-quarter deliveries report kicked off an early Independence Day celebration for Tesla. He singled out the pace of shipments, the 33,000-unit inventory draw and record energy storage performance as positives.
The analyst, however, warned that matching 2023 deliveries could be difficult for Tesla as it may need to increase sales by 6% in the second half.
The 33,000 reduction between production and shipments offsets the first-quarter inventory build-up and could add $1.5 billion to working capital this quarter, he said.
The show-stealer is the record storage number of 9.4 Gigawatt-hours for the quarter, which is nearly double Morgan Stanley’s estimate, Jonas said. “As the acceleration of the AI generation drives multi-generational growth in energy demand, power generation and data center investment, we believe investors will begin to pay more attention to Tesla Energy,” he said. . The analyst assigns a valuation of $38 per share for the business.
CANACCORD Price target increase: Ahead of Tesla’s earnings on July 23, CANACCORD analyst Genuity George Gianarikas raised its price target on Tesla shares from $222 to $254, a post from a Tesla influencer said, citing the firm. The earnings report is likely to bring new information on margin results and possible details on new vehicles and energy storage, the analyst said.
The most important information is FSD uptake rates, Gianarikas said. “With the company’s focus on autonomy, the latest one-month free trial and price cuts, we are very curious about FSD’s latest customer appeal,” he said.
“We’re uber-bulls on autonomy, but we believe that in its current form Tesla would be best served with another FSD price cut,” he added.
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