Tesla Delivers the Goods, but Analysts Remain Divided About the Stock’s Prospects

Tesla Delivers the Goods, but Analysts Remain Divided About the Stock’s Prospects

Tesla announced Friday that it delivered about 367,500 vehicles globally in 2019-meeting its guidance for the year of at least 360,000 vehicles and exceeding what Wall Street analysts had anticipated earlier in the week. The majority of EV purchases in China - around 70% according to Sanford C. Bernstein - have so far been targeted at government and "policy-oriented" customers, including taxis, mobility services and other government-related fleet operators. As the fuel prices rise, sales of fuel-powered vehicles are likely to go down which may translate into higher sales for Tesla.

Wang Lei, a Shanghai-based analyst for China International Capital Corp, said Tesla could sell a combined 120,000 Model 3 and Model Y vehicles. Tesla had a bumpy ride in 2019, but the turnaround, though, has been impressive with TSLA stock up over 80% since the start of October. Most of this is from the super-popular Model 3 sedan, with 92,500 Model 3s delivered - a 46% increase of Q4 2018, while delivering 19,450 Model S and Model X electric vehicles. Yale Zhang, director of Shanghai-based consulting firm AutoForesight, said that Tesla could sell around 100,000 Model 3 cars. "We have also demonstrated production run-rate capability of greater than 3,000 units per week, excluding local battery pack production which began in late December", the company added in its report.

To this end, the 4-star analyst reiterated a Neutral rating on Tesla stock alongside a price target of $370, which implies possible downside of 16.50%. Daniel Ives of Wedbush, who has a neutral rating on stock and a price target that implies almost 14% downside from where shares closed Thursday, called the results "another major feather in the cap for Musk & Co." in a Friday report.

The delivery results defy sceptics of Musk, whose mercurial behaviour over the last two years came under close scrutiny from federal regulators and shareholders of Tesla.

Good for the company, the number of registrations of Tesla vehicles in China rose 14-fold to 5,597 in November. "We are confident about selling all vehicles manufactured in this factory".

Tesla also provided an update on its Shanghai factory, which has started churning out Model 3 cars.

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