Tesla (TSLA) stock rises with Model 3 delivery optimism

Tesla’s (TSLA) stock is surging today with an increase of 4% after the market opened following a note from a Wall Street analyst showing increasing optimism on Model 3 deliveries.

KeyBanc analyst Brad Erikson wrote in a note to clients today:

Our checks with sales centers indicate Model 3 deliveries are tracking ~50% higher than our prior estimates for the quarter, prompting us to raise our estimates. While the longer-term debate on TSLA remains more balanced … we maintain that evidence supporting the bear case is not likely to emerge in the near term, in our view.

Erikson now estimates that Tesla could deliver as many as 30,000 Model 3 vehicles during the second quarter.

Based on the latest Model 3 production update, Tesla was capable of producing Model 3 vehicles at a rate of about 3,500 units per week.

Despite this significant increase in delivery, Erikson maintains a $300 price target with a sector weight rating (hold), under Tesla’s current share price.

The analyst wrote in the note:

Long-term thesis on TSLA unchanged. Our rating is built on the core belief that there is significant premium built into the stock on perceptions of the Company’s innovative superiority around the five critical aspects of the story: manufacturing, batteries, software, AI, and competition.

Brad Erikson is ranked #2,454 out of 4,829 Analysts on TipRanks with a success rate of 54% and an average return of 1.9%. He has only ever recommended to ‘hold’ Tesla’s stock over the past 2 years:

Electrek’s Take

I think a lot of Wall Street analysts will have to update their models of Tesla based on increasing Model 3 deliveries.

With this said, I am not sure about 30,000 deliveries during the quarter.

Considering production was down for about 2 weeks, it would require a production and delivery of about 2,700 vehicles per week.

I doubt that it will be the average for the quarter unless Tesla can achieve its targeted rate of 5,000 units per week before the very end of the quarter.

Otherwise, there will likely be a lot of vehicles in transit to customers at the end of the quarter. I think closer to 25,000 Model 3 vehicles during Q2 is more likely.

Either way, it will undoubtedly be a record quarter for Tesla deliveries – most likely over 40,000 vehicles total, but we should have a much better idea in the next few weeks.

What do you think? Let us know in the comment section below.