Tesla stock jumps on forecasted Q3 bump

Wedbush analyst sees full year deliveries nearing 900,000 units

Tesla Inc. shares bumped higher Monday ahead of the cleanenergy carmaker’s third quarter earnings later this week, with Wedbush analysts Dan Ives expecting an ‘across the board beat’ following record deliveries and surging China sales.

Tesla, which moved more than 241,000 cars over the September quarter a record high powered by robust demand in China is expected to post profits of $1.54 (U.S.) per share, on revenues of $13.7 billion, when it reports after the close of trading on Wednesday.

Ives says Tesla could be on pace for a 2021 delivery total of around 900,000 units, a tally he sees rising to as high as 1.4 million in 2022, even in the face of a global shortage in semiconductors that is hamstringing traditional OEMs such as Ford Motor Co. (F), General Motors (GM) and Toyota (TM).

Ives carries an ‘outperform’ rating with a $1,000 price target on the stock.

“With the chip shortage a major overhang on the auto space and logistical issues globally, these delivery numbers combined with this week’s likely earnings beat speaks to an EV demand trajectory that looks quite robust for Tesla heading into 4Q and 2022,” Ives noted. “While the skeptics will remain, we believe the EV evolution is still in the early innings with Tesla leading the charge as today only 3 per cent of automotive sales are EV globally and on a pace to hit 10 per cent by 2025.”

Tesla shares were marked 2 per cent higher in early Monday trading, against a 0.36 per cent dip for the Nasdaq Composite, to change hands at $860.20 each, the highest since February 8.

Recent data from China’s Passenger Car Association showed Tesla sold 56,006 of its Chinamade vehicles in the world’s biggest car market last month, a 27 per cent increase from August and a tally that added the final piece of information to its record third quarter deliveries, which rose 73.2 per cent from last year to 241,300.

“We believe China demand rebounded in the quarter and is clear indicator of the step up in EV demand taking place globally with China leading the way,” Ives said.

“While there are many competitors in the EV space, Tesla continues to dominate market share as evidenced again this quarter while battling through the chip shortage and now is seeing rebounding China demand after facing headwinds earlier this year.”

Tesla acknowledged “supply chain and logistics challenges” in its third quarter delivery statement, and thanked customers “for their patience” over the quarter, while Musk admitted the carmaker was “operating under extreme supply chain limitations regarding certain ‘standard’ automotive chips”.

The group told investors in July that it could impact production rates over the second half of the year.