Tesla Deliveries Smashed Expectations. The Stock Should Rise Monday. - Barron's

Tesla deliveries beat Wall Street expectations.

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Tesla delivered a great bit of news Friday. The electric vehicle pioneer posted a healthy quarterly increase in deliveries, a number more than double 2020’s first-quarter total.

Investors had been wary of the figures—not because of demand or competition, but because of the global automotive chip shortage. Their worries turned out to be overblown, and the Tesla (ticker: TSLA) stock should rise Monday. U.S. markets are closed for Good Friday.

Tesla delivered about 185,000 vehicles in the first quarter, compared with 181,000 in the fourth-quarter of 2020 and about 88,000 vehicles in the first quarter of 2020. Year-over-year growth is more than 100%.

Wall Street estimates ranged from roughly 162,000 to about 172,000. Estimates had fallen from more than 180,000 deliveries, mainly because of the chip shortage.

Tesla didn’t mention the chip shortage in its report. It did point out, however, that the Model Y has been received in China. The company began manufacturing the Y in China a few months ago. .

The result keeps Tesla on track to deliver the Wall Street consensus of roughly 800,000 vehicles in 2021, up about 60% year over year. Tesla didn’t provide 2021 delivery guidance, but didn’t that it was targeting 50% average annual unit delivery growth for the foreseeable future.

Tesla stock rose about 7% this past week; shares dipped 0.9% in Thursday trading to $661.75. The S&P 500 added about 1% and the Dow Jones Industrial Average was flat.

Still, shares are down about 6% year to date and about 26% from their 52-week high. Higher interest rates have hurt many high-growth stocks.

Higher rates hit high-growth stocks more than others in two main ways. First, it makes financing growth more expensive. Second, high growth companies generate most of their cash flow far in the future. That’s worth a little less, relatively speaking, when investors have the option to earn more interest on their capital today.

With the delivery numbers in the books, investors will look ahead to first-quarter earnings due later in April. Analysts expect about 70 cents in per-share earnings. Estimates are down about a nickel from recent highs. The delivery result should make the 70-cent figure easier to hit.

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