Tesla stock turned back downward on Thursday.
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Tesla stock is trying to break out of its post-earnings funk, but it’s struggling. A positive report about production lifted shares in premarket trading Thursday, but the stock has dipped back into negative territory.
Electrek reported on Thursday that Tesla production is “sold out” for the second quarter. Tesla CEO Elon Musk said on the company’s first-quarter conference call last month that demand is the best he has seen.
That means Tesla should produce more than the 180,000-plus vehicles it produced in the first quarter. That’s good news, but growth is expected. Tesla is expected to produce about 800,000 vehicles in 2021.
Any positive commentary about second-quarter production is worth noting because of the global semiconductor shortage that is roiling the entire industry. Many global auto makers are taking down time in the second quarter because of the shortage. Ford Motor (F), for instance, estimates it will lose 50% of its planned second-quarter production.
Tesla stock (ticker: TSLA) has fallen about 9% since the company reported better-than-expected first-quarter earnings in late April.
Thursday’s report should be a welcome boost for the stock, and it was initially, with shares rising more than 1% in premarket trading. While the stock still has time to turn around Thursday, it was down about 0.8% at $665.70 in recent trading. The S&P 500 and Dow Jones Industrial Average were also down, though more modestly, while the Nasdaq Composite fell 0.8%.
A bunch of things have worked together to keep Tesla stock down since the electric-vehicle pioneer reported earnings. Earnings quality is one of them. Analysts questioned the quality of the first-quarter results because higher-than-expected zero-emission vehicle credit sales and a gain on Bitcoin trading contributed to profitability. But Tesla critics want to see more of its earnings come from cars.
Tesla can sell zero-emission credits because it makes more than its fair share of zero-emission cars. It sells them to auto makers who don’t make their quota of no-emission vehicles.
Stellantis (STLA)—the combination of Fiat Chrysler and Peugeot—announced this week that it plans to stop buying Tesla European emission credits in 2021. That has dinged Tesla shares as well. Tesla shares are down about 2% since the news started circulating earlier this week, but the Nasdaq Composite is also down about 2% over the same span.
Navellier & Associates Chief Investment Officer Louis Navellier called the loss “devastating” in a Wednesday email. Devastating is probably an overstatement. Tesla will still likely generate billions in credit sales during 2021. What’s more, Wall Street analysts have always modeled credit sales as a declining source of future revenue. Tesla didn’t respond to a Barron’s request for comment Wednesday on the Stellantis news.
Navellier isn’t a Tesla analyst at a brokerage, so he doesn’t have a rating or price target for Tesla shares.
Write to Al Root at [email protected]
