Tesla (TSLA) Stock Pops After Record Deliveries

The new year has brought good tidings for Tesla, Inc. (TSLA) investors. The electric car maker's shares popped by 10% to $1,163.63 on the morning of Jan. 3 after it reported an 87% surge in annual vehicle deliveries to 936,000 from the previous year. The company delivered 308,600 vehicles in the last quarter of 2021, up from 180,667 during the same time period a year earlier. Those figures handily beat analyst estimates of 267,000 for the current quarter and 897,000 for all of 2021.

Key Takeaways

  • Electric car maker Tesla's stock jumped by more than 10% after it reported fourth quarter deliveries that exceeded analyst estimates.
  • The jump in vehicle deliveries sets the stage for a positive earnings beat for the company.
  • Analysts are revising their estimates for Tesla's fourth quarter earnings.

The jump in Tesla's shares is a reversal of the company's recent fortunes. Sale of stock by Tesla CEO Elon Musk toward the end of last year depressed its once high-flying stock price by more than 10% and resulted in choppy trading patterns. The recent announcement on deliveries could signal the start of a short-term rally as analysts are revising their price targets and earnings estimates as a result of today's announcement.

An Impressive Fourth Quarter

The bulk of Tesla's delivery volume during the final quarter of 2021 came from Model 3 and Model Y vehicles. The models, which are economic versions of its pricier cars, accounted for more than 96% of overall customer deliveries. Model S and Model X cars accounted for the rest.

Tesla's delivery figures are impressive considering that it achieved this feat during an unprecedented pandemic year, which was marred by supply chain bottlenecks, chip shortages, and a series of regulatory problems for the company. For example, it had to stop operations at its factories due to shortages of raw materials. The National Highway Traffic Safety Administration (NHTSA) opened an investigation into Tesla's Autopilot feature. The company also had to contend with labor problems at its facility. 

But Tesla's software engineering chops helped it weather supply chain issues better than its counterparts in the auto industry. According to CEO Musk, Tesla rewrote its software to ensure that its production processes were able to support alternate chips. While the investigation into its Autopilot software is not complete, its effect on the company's share price has been temporary. Meanwhile, Tesla opened two new factories—one in Shanghai and another in Berlin—to multiply its production capabilities. The former facility is a hub for Model 3 exports to Europe.

The result has been a spike in its stock price. According to some, Tesla is the "biggest winner" in the pandemic-induced stock market bubble. Even a massive recall, announced at the end of last year, has not dented investor enthusiasm for Tesla's future, which was bolstered by a massive push toward electric vehicles by the Biden administration.

Analysts Take Note 

While analysts may have gotten their estimates for Tesla's final quarter deliveries wrong, many took note of the company's announcement this morning and revised their assessment of its stock. JPMorgan Chase & Co. (JPM) analyst Ryan Brinkman raised his price target for the stock from $250 to $295, calling his new price target "not ungenerous." Brinkman has a Sell rating for the stock but raised his fourth quarter earnings estimate to $2.22 per share, up from an earlier estimate of $1.54 per share.

RBC analyst Joseph Spak said that Tesla's announcement and share price jump were "fireworks to close the year (and start 2022)" and raised the firm's price target to $1,005 from the current $950. He also revised his earnings estimate for the company's fourth quarter to $2.81 per share from the current $2.07. Cowen analyst Jeffrey Osborne raised his fourth quarter earnings estimate for Tesla stock to $2.07 per share from the current $1.66. Noted Tesla bull Dan Ives, who has a price target of $1,400 for Tesla, left his price target and earnings estimates unchanged.

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