Shares of Tesla (NASDAQ: TSLA) rises on Wednesday by more than 4% and approaches the highest points. The increase in growth stock comes as several analysts express optimism about the chance that the carmaker will reach its ambitious target for 500,000 vehicle deliveries in 2020.
Achieving half a million vehicle deliveries in 2020 would be an impressive milestone for Tesla despite major obstacles. Tesla experienced unexpected setbacks this year when the company was forced to temporarily close its factories because it complied with government orders to interrupt production to limit the spread of COVID-19.
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What analysts say
Credit Suisse analyst Dan Levy and Wedbush analyst Daniel Ives also think electric car makers are likely to report high-quarter deliveries in the fourth quarter to meet Tesla’s requirements for 500,000 deliveries this year – a figure higher than about 368,000 deliveries in 2019.
Levy thinks Tesla will deliver about 183,000 vehicles in the fourth quarter. To emphasize how important this would be, it would represent 31% consecutive growth and 63% growth in deliveries in the fourth quarter of 2019.
Ives is even more positive about Tesla’s fourth quarter and notes that 190 to 200,000 deliveries are possible for the period. This forecast is based on its own analysis of demand and global delivery trends for Tesla vehicles.
However, there is still nothing in the bag. Both of these analysts’ views represent predictions, not facts. Not only can they go wrong, but there is still time for things to go wrong with deliveries. Ives, for example, notes that delivery logistics in Europe may delay some deliveries in the first quarter of 2021.
Nevertheless, Ives expressed confidence in the potential that Tesla would exceed many other analysts’ delivery expectations for 180,000 vehicles this quarter. Ives is particularly optimistic about the strong demand for Tesla vehicles in China, where Tesla has one of its most productive factories (the second next to its main plant in Fremont, California).
Stay focused on the long term
While these analysts’ opinions are interesting, investors need to stay focused in the long run.
The pick-up of potentially strong deliveries in the fourth quarter should not necessarily have an impact on share price movements in the short term. Instead, investors should consider what the reported deliveries imply about the long-term view of demand for Tesla’s vehicles. If Tesla can grow returns by 31% in a row and 63% on an annualized basis, it indicates that the company may still be early in its growth story.
Unfortunately, investors are unlikely to receive more specific information on how demand for its vehicles is doing until Tesla reports its financial results in the fourth quarter. The company usually announces its Q4 update in late January or early February.
In the meantime, however, it’s worth checking out how many vehicles Tesla delivers in Q4. But investors should not hang on to it, because it is only a quarter.
Tesla usually reports its deliveries in the fourth quarter at some point between January 1st and 3rd.