Tesla stock rises again, erases fallout from delivery report

Tesla stock is rising again — here’s why it may be refusing to sell off

On Thursday, Tesla stock achieved a remarkable turnaround, erasing all the losses it suffered after a delivery report that many analysts and investors called a disaster.

Tesla shares soared to a high of $177.19 during the day but settled at $171.11 by market close, amidst a broader market sell-off that saw the Dow Jones index post its worst day since March 2023. The stock closed at $175.22 on Monday, just before Tesla announced its first-quarter delivery figures.

Tesla shares slumped by close to 5% at $166.63 on Tuesday after the company reported first-quarter deliveries of approximately 387,000 vehicles, marking an almost 9% decline from the previous year. This drop marked the largest year-over-year decrease on record, falling short of the lowest analyst estimates by around 20,000 vehicles.

The shares closed Thursday up by 1.6% at $171.11, showcasing an impressive recovery from the post-delivery report dip.

Factors that may be supporting Tesla stock

Several factors appear to have contributed to the Tesla stock rebound, as outlined by Barron’s reporter Al Root in a piece on April 5.

According to Root, a prevailing view among optimistic investors is that the first quarter was an outlier.

“One reason for the bounce is narrative. Bulls believe that the first quarter was an anomaly driven by Model 3 production problems in Fremont, Calif., Red Sea shipping delays, and lost production in Germany”, Root wrote in his recent Tesla stock overview.

However, skepticism remains. Vicki Bryan from Bond Angle pointed out on Wednesday that despite Tesla's explanation, the first quarter saw a "sales crash" amidst an all-time high in excess inventory. Tesla manufactured 433,000 units in the quarter, resulting in an inventory surplus of over 46,000 vehicles, the largest production-to-delivery discrepancy to date.

Yet, Tesla's account appears to be widely accepted for the time being.

Tesla stock ratings remain unchanged after delivery report

Another factor supporting Tesla stock's bounce is the reaction from Wall Street, which saw no downgrades of Tesla shares following the delivery report, and minimal adjustments to forecasts.

Morgan Stanley's Adam Jonas slightly lowered his price target for Tesla to $310 from $320 while maintaining a Buy rating, despite reducing his delivery projection for 2024.

Wall Street's consensus on Tesla's 2024 earnings per share (EPS) has adjusted slightly to around $2.78, with the average price target now standing at $198, down from $200 at the week's start.

Low starting point and unpredictability also may be factors in TSLA rebound

Investor sentiment entering the week, already low due to a nearly 30% year-to-date drop in the Tesla stock price, may have cushioned the impact of the delivery news.

" A final reason might feel like a stretch but will resonate with longtime Tesla watchers: Tesla stock never seems to do what people expect,” wrote reporter Al Root.

With TSLA shares making a recovery, the focus now shifts to the Q1 Tesla earnings report on April 23 and the Q2 delivery figures due on July 2, both of which will be closely watched.

In premarket trading on Friday, Tesla stock was down by 0.4% to $170.28. As of April 5, TSLA shares have lost over 31% of their market value year-to-date.

S&P 500 and Nasdaq Composite futures showed modest gains of 0.2% and 0.3%, respectively.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.