The fortunes of Tesla, Inc. (NASDAQ:TSLA) have made a sudden right turn, and there appear to be few speed bumps in sight. Yes, Tesla stock isn’t exactly a bargain right now — especially in the midst of a 30%-plus year-to-date run, topped by a 4% increase on Monday — but at this point, you shouldn’t hold your breath waiting for a cheaper price.
In a press release Sunday, Tesla announced it delivered just more than 25,000 vehicles in the first quarter. The deliveries total — which marks a company record — topped Wall Street estimates, which ranged anywhere between 23,000 and 24,500 vehicles. For context, the figure also represents an almost 70% improvement year-over-year.
Of the 25,000 vehicles that were delivered, Tesla said roughly 13,450 units were Model S sedans — the company’s highest-priced vehicle. Meanwhile, 11,500 vehicles were Model X SUVs.
Tesla CEO Elon Musk has drawn criticism for several things, including the company’s high cash burn, but perhaps most notable is TSLA’s track record of missed delivery targets.
But that narrative is beginning to change …
Can You Actually Trust Tesla Stock?
TSLA did disappoint investors with a delivery miss in the fourth quarter. However, the Palo Alto, California-based electric car maker has now topped its delivery forecast in two of the past three quarters.
Better still, the company is on pace to deliver 50,000 cars in the first half of 2017, which would match the high end of Tesla’s own estimates.
Tesla also announced Sunday that during the quarter, not only did it produce 25,418 vehicles, but that about roughly 4,650 vehicles were on their way to their customers. Those will filter into Q2’s deliveries number.
The fact that first-quarter deliveries beat estimates, combined with higher potential deliveries in the first half of 2017 vindicates some of the decisions Musk has made. And all of it bodes well for Tesla stock in the short-term.
China’s Tencent Holdings Ltd (OTCMKTS:TCHEY), which last week announced it bought a 5% stake Tesla for $1.78 billion, looks prescient now. And with Tesla gearing up to launch its Model 3 sedan in an effort to compete with Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) in vehicle mass-market production, Tencent can help Tesla grab a stronger foothold in China, which is the largest automobile market in the world.
The Model 3, by the way, is yet another area in which it looks like Tesla can beat back its past issues of false starts, with the company saying earlier this year that it’s on track to begin production on time.
Bottom Line for Tesla Stock
Tesla closed Friday at $278.30 — about 8% higher than when I last recommended the stock. Better still, shares have soared some 55% from their Dec. 2 low.
Click to Enlarge All of this coincides with a pretty important technical event. Tesla stock is not only bouncing off its 50-day moving average and well off its longer-term 200-day moving average, but it has crashed a price ceiling at $280 that beat shares back in 2014, 2015 and earlier this year.
In other words, technically speaking, the sky’s the limit.
With Tesla seemingly operating on all cylinders, there’s now increased confidence that the company not only can deliver on Model 3 production estimates, but also boost demand for the Model S and Model X in the quarters ahead.
This makes Tesla stock a no-doubt buy despite its recent gains.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.
