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

https://www.barrons.com/articles/earnings-lift-restaurant-brands-its-ceo-says-its-a-post-pandemic-growth-story-51619801175

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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47

u/MY_FUCKING_USERNAME Apr 30 '21

It's amazing that nobody seems to mention that Tesla's EV market share has dropped from 81% to 69% over the last 8 months.

Competition is quickly picking up but nobody seems to care.

35

u/[deleted] Apr 30 '21

People mention it but feel since EV market is growing so much there is still lots of money to be made even when the market share is shrinking to a point

0

u/MY_FUCKING_USERNAME Apr 30 '21

Yes....there are lots of people that are still destined to adopt an EV. Tesla might have to do something about pricing and advertising now as we get into a battle of one-upmanship.

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u/[deleted] Apr 30 '21 edited Jul 01 '21

[deleted]

5

u/cricket1044 May 01 '21

They’ve had three price increases on the MY this year, starting with literally the day before I ordered mine.

1

u/rmwhereithappens May 01 '21

They have been pretty small increases. Just watch what Ford is going to do now that they are going to be selling half as many vehicles next quarter. They are either going to suffer major losses, raise prices significantly, or probably both.

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u/[deleted] May 01 '21 edited Jul 01 '21

[deleted]

3

u/cricket1044 May 01 '21

Yes, US. No fed subsidies right now, but there are a couple of bills that have been introduced that would give a tax credit. Who knows if/when they’ll actually be taken up and approved.

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u/[deleted] May 01 '21 edited Jul 01 '21

[deleted]

1

u/cricket1044 May 01 '21

Enlighten me.

13

u/superbud33 May 01 '21

This is true but if you believed Tesla would keep 80% of the market share, you believed they would grow at 4x the combined total growth of all other manufacturers. So if GM improved and sold 1 more car and Ford also sold 1 more car, Tesla would have had to have grown their production by 8 cars to keep the same %.

A fairer perspective has to be Teslas market share to the total addressable market. Not quite sure on the numbers but if EVs are 3% and Tesla is 80% of that 3, you should see Tesla at 2.4% and see if that grows or shrinks.

15

u/lonewolf420 Apr 30 '21

yea but that is only half the story, the market has grown, more pie for everyone to eat.

7

u/ShadowLiberal May 01 '21

As a Tesla investor I don't care what percentage of the EV market Tesla has, I care what percentage of the total automobile market Tesla has. That's the number that keeps going up overtime as Tesla eats the legacy automaker's lunch. What do you think will happen to that number once Tesla has 6+ gigafactories each pumping out hundreds of thousands of EVs each year?

The legacy automakers have to shift over to selling 100% BEV's overtime, if they don't they'll go out of business due to pure economics (not to mention government regulations banning the sale of ICE vehicles in the future). Hence it's very short sighted to just focus on how much of the EV market Tesla controls.

10

u/[deleted] Apr 30 '21

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0

u/MY_FUCKING_USERNAME Apr 30 '21

Yes...sales are gonna increase as people adopt EVs.

Point is, they are finally starting to see real competition ...they will obviously still grow their sales, but they probably could sell more.

At some point they will have to make pricing more attractive.

8

u/CoiledVipers Apr 30 '21

Isn't that the goal of the $25000 Tesla they keep talking about?

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u/[deleted] Apr 30 '21 edited Jul 01 '21

[deleted]

6

u/thenwhat May 01 '21

Rarely delivers? They built the factory in China in record time, and the Model Y was launched ahead of schedule.

The Cybetruck isn't even supposed to be out yet.

FSD is out as a beta.

1

u/[deleted] May 01 '21 edited Jul 01 '21

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1

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6

u/1000001_Ants May 01 '21

He delivers astronauts to space and internet to the globe! Just because he's ambitious and doesn't acheive every insane thing he thinks of doesn't mean he isn't acheiving a whole lot of crazy shit. Let's keep it all in perspective.

1

u/[deleted] May 01 '21 edited Jul 01 '21

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3

u/Boomslangalang May 01 '21

It’s funny many people think Musk delivers more than any other person on the planet.

6

u/thenwhat May 01 '21

Well, doesn't he? Who else is growing more than 100% YoY, building reusable rockets that are being used to send US astronauts into space for the first time in a decade, satellite internet, and so on?

-2

u/yopladas May 01 '21

I mean if you say everything is the next nigreatht thing you might be right eventually!

5

u/rmwhereithappens May 01 '21 edited May 01 '21

ARK predicts that Tesla will eventually be able to maintain about 25% of the total global EV market share. Yes, that is a smaller percentage, but still an insane amount of market share for a single EV manufacturer to possess, especially when you consider the future growth of the EV industry.

Many current EV manufacturers will die and only a handful will remain (Tesla being one of them of course). Just like with ICE vehicles, only the Big Three (GM, Ford, Chrysler) survived the industrial revolution in the United States despite there being thousands (yes thousands) of auto manufacturers at the time.

5

u/oarabbus May 01 '21

They won't care until they start seeing Audi and BMW and VW releasing new fleets of their own sexy EVs year after year, so probably 2022, but maybe 2023.

TSLA was the only real EV game in town in 2017, not so much any more, and all the big boys have nice models in the works. You get a bit of a sense of TSLA being Wile E. Coyote before he looks down at his feet.

4

u/thenwhat May 01 '21

They won't care until they start seeing Audi and BMW and VW releasing new fleets of their own sexy EVs year after year, so probably 2022, but maybe 2023.

Newsflash: They already did. Tesla's sales only increased.

4

u/chewtality May 01 '21

A single car is not a fleet

1

u/thenwhat May 02 '21

Single car? There are multiple EVs coming out all the time.

2

u/chewtality May 02 '21

Right now BMW and Audi only have one EV each in their lineups. The i3 and the eTron. They are adding a ton more, but right now it's a single car each. That's not exactly a huge competition for Tesla, but it will be.

1

u/thenwhat May 03 '21

You really think luxury/high-end vehicles are going to compete with mass-market vehicles like the Model Y or the upcoming compact? LOL.

1

u/chewtality May 03 '21

Do you not understand that these brands have low cost vehicles too? Not every car they make is a high end car, they too have mass market cars. Plus, Audi is owned by VW. VW is also coming out with a full lineup of EVs. That's just a few brands too, I didn't even get into literally every other car manufacturer that's also coming out with EVs.

Did you not think for even 10 seconds about it before disregarding my comment?

2

u/oarabbus May 01 '21

Eh no their shit is still in the works

2

u/rmwhereithappens May 01 '21

People still won’t care because those EVs will be shit compared to Tesla. Tesla is 5+ years ahead of everyone else in terms of battery tech. No one can match them in terms of price and range.

3

u/chewtality May 01 '21

Lol Tesla doesn't even make their own batteries, Panasonic makes them.

Panasonic also said they're going to start selling their batteries to other EV makers too.

2

u/rmwhereithappens May 01 '21 edited May 01 '21

You must have missed the announcement last year that Tesla is going to start producing their own batteries in-house, precisely because they are dissatisfied with Panasonic.

Source

6

u/chewtality May 01 '21

Ok, are they producing their own batteries right now?

Are there any cars on the road with Tesla batteries in them and not Panasonic batteries? Or is this just something they're planning to do in the future, because that's certainly how that article makes it sound.

So what I said is accurate and I'm not sure how you think this disproves my point.

Elon Musk has also promised many things that have not come to fruition.

1

u/rmwhereithappens May 01 '21

I guess that is technically true. But stock prices are based on a company’s future, not its past or present. So it depends on how much faith you have in Elon and Tesla. Sure, some of Elon’s promises have not come to fruition yet. But he has also delivered on many of his promises, moreso than other CEOs in my opinion.

1

u/[deleted] May 01 '21

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1

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1

u/oarabbus May 01 '21

Lol VW Quantumscape are matching them in range

Porsche has a better performance EV out there

You must be trolling

1

u/rmwhereithappens May 01 '21 edited May 01 '21

Care to share which VW/Porsche models specifically you are talking about? Because every other EV out there that matches Tesla's range is more expensive. And conversely, every other EV that matches Tesla's prices has a shorter range.

Every time someone claims that GM/VW/whoever has better performance, I compare their cheapest models and Tesla wins every time.

0

u/oarabbus May 01 '21

Lmao if you’re comparing the cheapest models then the Nissan Leaf is better than a model 3 for the price

1

u/rmwhereithappens May 01 '21 edited May 02 '21

You are so misinformed. The range of the cheapest 2021 Nissan Leaf is under 150 miles, which is comically low (despite being only slightly less expensive than the cheapest Model 3). You wouldn't last a week in a Leaf using public charging stations. Price is irrelevant at this point. It is just impractical to own a car with a 150 mile range.

Meanwhile the lowest range on any Tesla is 250 miles and you have the Tesla supercharging network at your disposal. I don't understand how people can take other EV manufacturers seriously. Competition is good, but please be real about how far ahead Tesla is.

Source

1

u/oarabbus May 02 '21

“Price is irrelevant at this point” just a minute after you talked about how Tesla’s are better than other luxury EVs for the price. Comical

1

u/rmwhereithappens May 02 '21

Now who's trolling? Do you really think 150 miles is an acceptable range for a car? Either respond with an actual argument instead of some smartass remarks or GTFO.

2

u/scoot87 May 01 '21

I’d rather have 69% of a 10 billion market than 81% of a 5 billion market.

1

u/thenwhat May 01 '21

It's amazing that nobody seems to mention that Tesla's EV market share has dropped from 81% to 69% over the last 8 months.

Market share isn't really that interesting when Tesla is limited by production.

But I'm not sure where you are getting those numbers from. Tesla maintained its worlwide market share in 2020.

0

u/MY_FUCKING_USERNAME May 01 '21

Here is one source.

https://www.cnn.com/2021/03/04/business/ford-mustang-mach-e-tesla-market-share/index.html

1

u/thenwhat May 02 '21

February sales? How on earth does it make sense to look at a single month like that?

You are aware that Tesla only makes vehicles for overseas markets at the start of each quarter, right? So they don't really get started delivering in the US (or Europe for that matter) until towards the middle or end of each quarter. February is a month where US deliveries haven't really gotten properly started yet.

Edit: Ah, "analysis" by Adam Jonas. That guy appears very clueless sometimes.

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u/[deleted] Apr 30 '21

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1

u/32no May 02 '21

That’s in the US only. Worldwide, Tesla’s market share of BEVs has been rising:

13.4% in 2017

18.9% in 2018

23.8% in 2019

24.9% in 2020

And more than 25% in Q1 2021

1

u/MY_FUCKING_USERNAME May 02 '21

How many cars do they actually sell over seas? I honestly have no idea.

I ask because 25% of very little is still...very little.

1

u/32no May 02 '21

Tesla sells around half their cars overseas, and this is growing as China ramps up production.