Tesla Inc (Nasdaq: TSLA) investors are breathing a sigh of relief on Tuesday morning after the company reported first-quarter delivery numbers that were not nearly as bad as some analysts had feared. The relief rally sent Tesla shares higher by 4 percent, but questions remain about Tesla’s ability to hit its targets and manage its finances.
Tesla reported 34,494 total vehicle deliveries in the first quarter, up 40 percent from a year ago. Most importantly for Tesla investors, 9,766 of those vehicles were Model 3s. Tesla says it produced 2,020 Model 3s in the past week, once again missing its production target of 2,500 vehicles per week by the end of the first quarter. However, the stock is reacting positively after Tesla says it remains on target to reach 5,000 Model 3s per week by the end of the second quarter.
[See: The 10 Most Valuable Auto Companies in the World.]
Tesla originally said it would be producing 5,000 Model 3s per week by the end of 2017 before bumping that target back to the end of the first quarter of 2018 and then again to the end of the second quarter. Tesla stock has plummeted 23.9 percent in the past six months on increasing skepticism over its production targets.
In addition to the ramping production numbers, Tesla reassured investors that Tesla will not need to raise more cash this year.
Last week, Moody’s downgraded Tesla’s corporate family credit rating from B2 to B3, a rating corresponding to non-investment-grade speculative debt. Tesla reported a net loss of $2.24 billion in 2017.
In addition to the Model 3 delivery numbers, Tesla also reported 11,730 Model S deliveries and 10,070 Model X deliveries.
Tesla’s first-quarter numbers were not as bad as some analysts had warned. Baird was forecasting 8,000 Model 3 deliveries, 10,000 Model X deliveries and 10,000 Model S deliveries, all of which ended up being overly pessimistic.
[See: 7 Auto Stocks to Drive Income.]
But despite the positive market reaction, Jefferies analyst Philippe Houchois says it’s still too early for long-term investors to get excited about Tesla stock.
“We accept that innovation, electric vehicle growth and other [total addressable market] potential justify a relatively high multiple but remain concerned auto margins and [return on invested capital] will barely match peers at best,” Houchois says.
Jefferies has a “hold” rating and $250 price target for TSLA stock.
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Tesla Inc (TSLA) Misses Yet Another Production Target originally appeared on usnews.com
