Shares of Tesla Motors, Inc. (NASDAQ: TSLA) are surging Monday morning, rising more than 8% on strong volume in premarket before settling just shy of 4% after Tesla announced preliminary third-quarter delivery results. Tesla stock, which is down 15% year to date, had been parked in negative territory for the past month. Is now the time to ride shotgun?
In a press release on Sunday, the electric car manufacturer announced it had delivered 24,500 cars in the third quarter. Not only does that mark an almost 40% jump from Q2, it’s Tesla’s highest sales total since the company was founded. Plus, on a year-over-year basis, the 24,500 number is more than double the deliveries Tesla made in last year’s Q3.
Third-quarter production climbed 37% sequentially, reaching 25,185 vehicles, the company said. Tesla said some 5,500 vehicles are currently on their way to their owners, which the company will record as deliveries in fourth quarter.
This is on top of the 15,800 Model S cars and 8,700 Model X cars that Tesla has already shipped to customer at the end of the third quarter. This means Tesla’s fourth-quarter production totals may surpass the strong numbers produced in the third quarter.
What This Means for TSLA Stock
Obviously, all of this bodes well for Tesla stock, which has been under pressure ever since Tesla missed its second-quarter delivery guidance of 17,000 by almost 3,000 vehicles.
The fact that Tesla’s third-quarter deliveries have come above expectations and higher potential deliveries in Q4 vindicates some the questionable moves made by CEO Elon Musk, including its head-spinner acquisition of SolarCity Corp (NASDAQ:SCTY) — a deal the market collectively hated.
Musk wants to Tesla to become more mainstream. To that end, producing the more-affordable Model 3 cars would help elevate Tesla beyond the niche high-end affluent market, putting it on par with the likes of Ford Motor Company (NYSE:F) and General Motors Company (NYSE: GM). But the rate at which Tesla was burning through cash, combined with its second-quarter production miss raised questions about Tesla’s future. Today both the Tesla and TSLA stock are flying high.
And we can point to the emphasis Musk has placed on cost-cutting and having a near-term impact. In August, Musk sent an email to employees, urging the importance of fiscal awareness amid the company’s production ramp: “It would be awesome to throw a pie in the face of all the naysayers on Wall Street who keep insisting that Tesla will always be a money-loser!,” Musk proclaimed in his email to employees on Aug. 29.
Bottom Line for Tesla Stock
Today, a pie has just hit the face of some Tesla doubters.
With Tesla saying it still expects to produce 50,000 cars in the second half of 2016 along with its promise to omit non-GAAP revenue and related financial metrics in its future releases, Musk wants Tesla to be taken seriously.
And with TSLA stock still down by double-digits year to date, now seems like a great buying opportunity.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.
