Tesla stock climbs for first day in six as Elon Musk promises record sales

Tesla stock climbs for first day in six as Elon Musk promises record sales

According to an email sent by CEO Elon Musk to employees last night, Tesla is on pace for a new record quarter for deliveries – beating the last record achieved at the end of last year.

Previously, in Q4 2018, Tesla delivered a record of 90.700 cars – making it the best quarter in its history and delivering its second quarterly profit in a row. Unfortunately, sales plummeted during the first quarter of 2019.

It was followed by a very difficult quarter for Tesla in Q1 2019.

During the first three months of the year, Tesla lost $702 million as deliveries slowed down due to a difficult launch of the Model 3 in Europe and Model S/X deliveries plummeting.

Tesla stock regains some strength

Tesla Inc. stock on had an unexpected rise for the first time in six sessions, boosted by a leaked email from Chief Executive Elon Musk promising record-breaking sales for the company.

Tesla TSLA, -2.49%  shares were up 2%, hovering around the psychologically important $200 mark.

Last Thursday, Electrek, an online publication mostly focused on the Silicon Valley car maker, reported that Musk had sent an email to employees late Wednesday, saying that Tesla could beat a previous delivery record and had more than 50,000 net new orders for this quarter.

The CEO said that they need to sustain 1.000 Model 3 vehicles per day throughout the rest of the quarter in order to achieve a new delivery record:

“In order to achieve this, we need sustained output of 1,000 Model 3’s per day. Almost all parts of the Model 3 production system have exceeded 1,000 units on multiple days (congratulations!!) and we’ve averaged about 900/day this week, so we’re only about 10% away from 7,000/week.”

Musk thinks that if the Tesla team “rallies hard”, they can do it.

Tesla did not immediately return a request for comment about the new Musk email.

Tesla last month reported first-quarter deliveries that missed Wall Street expectations, adding to the worries about the company’s short term. Fourth-quarter deliveries, while also missing forecasts, were a high-water mark for the car maker.

Analysts have a negative forecast on the Tesla situation

During the recent days, both Musk and Wall Street analysts have been negative. Musk, having sent an email about some hardcore cost cuts, and analysts lowering their expectations for the company.

Garrett Nelson, an analyst at CFRA, cut his 12-month price target on Tesla by $50 to $150 in a note on Thursday.

“We see shares continuing to trade lower on a lack of near-term catalysts. While (Tesla’s) recent capital raise helps ease liquidity worries, we remain highly concerned about its vehicle sales and margins. (Tesla’s) federal EV tax credit is set to decline by another 50% to $1,875/vehicle at the end of next month, which we believe will place it at a disadvantage to EV competitors still eligible for the full $7.500 credit.”

Nelson said in the note to clients.

Tesla’s “management’s recent comments about its cash burn raises the question of why Tesla didn’t issue more equity,” he said.

The shares have lost 30% in the past 12 months and 42% so far this year. That contrasts with gains of about 3% and 13% for the S&P 500 index SPX, +0.14%  in the same period.

Source: marketwatch.com