Tesla's Record Quarter a 'Feather in the Cap' for Musk, But Demand Doubts Remain

Tesla's 95,200 second quarter deliveries are good news for the company, but it still isn't clear whether Tesla can keep it up in the second half of the year and turn a profit, according to one analyst.
By Annie Gaus ,

Tesla (TSLA) - Get Report delivered on a record quarter, but it's not out of the weeds just yet.

In a press release Tuesday, the electric carmaker reported 95,200 vehicle deliveries in the second quarter, topping a 91,000 estimate compiled by FactSet and sending shares up 6.8% in after-hours trading.

"It's a clear step in the right direction for Musk and Tesla after what's been a dark chapter for the company," said Wedbush analyst Dan Ives, who covers Tesla. "This is a feather in the cap for Musk."

As of last quarter, Tesla faced considerable doubt about its ability to meet delivery targets this year amid growing competition, a phase-out of federal tax credits for EVs and difficulties in shipping cars to new markets in Europe and China, among other issues.

Tesla delivered just 63,000 cars in the first quarter, missing expectations by a wide margin after warning investors early in the year that deliveries would likely fall short of hopes. It also posted a loss, despite earlier promises by Musk that Tesla was on track for sustained profitability.

In the first-quarter report, Tesla reaffirmed its full-year forecast of 360,000 to 400,000 deliveries in 2019 -- a number that many analysts consider aggressive.

"This quarter brings them to 158,219 total deliveries at the midway point of the year, with 201,781 deliveries remaining to meet the low end of their guidance. That implies about 100k deliveries in each of the next two quarters, so this all-time high needs to be followed up with another record next quarter," wrote Loup Ventures' Gene Munster on Tuesday. 

Media reports over the past two weeks indicate that Tesla delivered aggressively overseas in the latter part of the second quarter, with Musk recently writing in an email to employees that Tesla could have a record quarter if it goes "all out."

Ives added that questions remain about how demand will hold up in the second half of the year. On Tuesday, Tesla said that its delivery backlog for the third quarter 2019 has risen, with orders generated during the second quarter exceeding deliveries.

"We thought that was an aggressive number to begin with," Ives said, referring to Tesla's full-year delivery forecast of 360,000 to 400,000 vehicles. "It's still attainable, but I continue to believe that's going to be an extremely difficult number to hit."

Tesla shares are down 26% this year. 

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