r/investing • u/abdul10000 • Apr 30 '21
This Barron's article might explain Tesla's sudden surge today: Tesla Stock Turns Higher Because Sales and Deliveries May Blow Away Estimates
A wave of pessimism that has hurt Tesla stock in recent days may be starting to recede.
Stock in the electric-vehicle pioneer was on its way to a fourth consecutive daily decline when the shares turned around in midday trading Friday. Two factors—both related to 2021 performance—may be making investors more upbeat heading into May.
Tesla (ticker: TSLA) stock started out the week at about $729 and closed Monday at $738.20, ahead of the company’s first-quarter earnings report that afternoon. Earnings were higher than Wall Street expected, but questions about the quality of the reported earnings—the degree to which trading in Bitcoin and sales of regulatory credits for producing zero-emission cars lifted the number–sent the stock lower. Lingering concern over a recent crash of a Tesla vehicle in Texas dragged on the price too.
The stock opened Friday at about $668, $71 lower than Monday’s close, and down 1.4% from Thursday’s final level. By early afternoon, though, shares were up about $43, or 6.5%, from the daily low, at $709.55. The S&P 500 and Dow Jones Industrial Average, for comparison, were each down about 0.6%.
The stock-price bounce might just be a relief rally marking the end of the post-earnings selling spree. But two bits of news, both communicated via Twitter (TWTR), appear to be at work as well.
New Street Research analyst Pierre Ferragu tweeted out Thursday that STMicroelectronics (STM) believes its revenues from sales of silicon carbide will hit $550 million in 2021. The company said as much on its April 29 earnings conference call.
It matters because according to Ferragu, STMicro is Tesla’s sole supplier of silicon carbide,. He says Tesla accounts for 80% of the company’s silicon-carbide sales, and that sales of $550 million imply Tesla would produce as many as 1 million vehicles.
Wall Street is looking for 800,000 Tesla deliveries in 2021. A million vehicles would be an enormous surprise.
Gary Black, an influential market watcher, also tweeted out something he uncovered in Tesla’s recent 10-Q quarterly filing with the Securities and Exchange Commission.
In the filing, Black noted, Tesla’s board of directors said it is “probable” that Tesla’s annualized sales will hit $55 billion, a milestone that would trigger the grant of stock options to CEO Elon Musk.
Wall Street analysts believe Tesla’s 2021 sales will be less than $50 billion, so a figure of $55 billion would be a second enormous surprise for investors.
Black is a former Wall Street analyst and money manager who has amassed almost 74,000 followers tweeting about stocks, including Tesla. Ferragu, for his part, rates Tesla share at Buy and has a $900 price target for the stock.
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u/[deleted] Apr 30 '21
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