Tesla (TSLA) Chief Executive Elon Musk has defied big odds and consistently beat expectations since taking the helm of the electric-vehicle manufacturer in 2008. Now, having turned in a better-than-expected earnings report for the second quarter, coupled with a warning that the chip shortage hitting the auto industry remains serious, is Tesla stock a buy?
In the conference call with analysts after the earnings report, Musk said it was a record quarter on many levels.
“We achieved record production, deliveries, and surpassed over $1 billion in GAAP net income for the first time in Tesla’s history,” he said. But he added: “While we’re making cars at full speed, the global chip shortage situation remains quite serious. The chip supply is fundamentally the governing factor on our output.”
Despite the chip shortage, Tesla revenue nearly doubled to $11.96 billion, above estimates for $11.53 billion. Adjusted earnings shot up 230% to $1.45 a share, handily topping estimates from analysts polled by FactSet for 94 cents.
Deliveries Soar During The Quarter
Tesla previously reported that it delivered 201,250 vehicles in the second quarter, up from the prior record of 184,800 in the first quarter. Deliveries soared 120% from the year-ago period.
Meanwhile, China-based rivals Nio (NIO), Xpeng (XPEV) and Li Auto (LI) recently reported strong second-quarter deliveries.
Tesla plans to build its first Model Y vehicles in Berlin and Austin during 2021. But the company said its Semi electric big-rig truck won’t arrive until next year. Musk recently confirmed that the long-awaited Roadster will be pushed back, again, to at least 2023. Reports also said that the Tesla Cybertruck won’t be out until late 2022, with volume production not until late 2023. The delay suggests that the 4680 battery cells that power the Cybertruck are still far off from mass production.
Will Massive Expansion Bolster TSLA Stock
Tesla has undertaken a massive expansion of its manufacturing capabilities. Musk wants to eventually build 20 million electric vehicles a year over the next decade. That’s more than double the current production of other auto-making giants. So it’s now on a mission to rapidly expand its manufacturing capabilities.
Meanwhile, Tesla Autopilot probes expanded. The National Highway Traffic Safety Administration issued a letter to Tesla, demand a wealth of data as part of its probe of 12 Tesla Autopilot crashes into first responder vehicles parked on the side of roads. Safety regulators also will probe a Tesla crash in New York killing a person changing a tire
When Tesla starts pumping out cars in Germany, it will go head-to-head in electric vehicles with three established German names: Volkswagen Group (VWAGY), BMW (BMWYY) and the Mercedes-Benz division of Daimler AG (DDAIF). Other serious competitors include General Motors (GM) and Ford Motor (F), in addition to its China rivals.
Tesla still has a solid lead in the global EV market share, according to a Morgan Stanley report. The July 27 note shows Tesla has sold 382,831 vehicles year to date and has a 21% market share. No. 2 General Motors has 12% market share with sales reaching 221,486 so far this year. Volkswagen takes third place with 10% electric-vehicle market share and 183,197 vehicles sold.
Checkup On Tesla Stock
According to the IBD Stock Checkup tool, Tesla stock has an IBD Composite Rating of 96 out of 99. The rating means Tesla stock currently outperforms 96% of all stocks. That’s in terms of the most important fundamental and technical stock-picking criteria.
The stock also has a Relative Strength Rating of 86. The rating tracks market leadership. It shows how a stock’s price movement over the past 52 weeks measures against that of other stocks.
Its Accumulation/Distribution Rating is B+. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A grade of A signals heavy institutional buying. The lowest rating of E means heavy selling. Think of the C grade as neutral.
Among other Tesla data points, its relative strength line has been trending upward and holding. The RS line measures a stock’s strength against all stocks in the S&P 500. The RS line is the blue line in the chart shown. Typically, the RS line of the strongest stocks is either confirming or leading a stock’s price into new high ground.
In the stock market, timing is critical. So when you’re looking for stocks to buy or sell, it’s important to do the fundamental and technical analysis that identifies lower-risk entry points that also offer solid potential rewards.
Is Tesla Stock A Buy?
Negative Tesla headlines are building up on expanding crash probes and product delays, but Tesla stock has held its buy point. The buy point ranges from 730 up to 766.50.
A deep, large base also continues to form. The EV giant is also finding support above its key 50 day and 200-day moving averages, according to Leaderboard..
If you’re interested in buying large-cap stocks, in these articles you’ll find technical analysis of leading large caps to see if they are in or near a proper buy zone.
You’ll also find alerts to warning signs and sell signals that show when to take your profits or cut short any losses. You’ll also discover if the current stock market trend is conducive to buying stocks, or if it’s an environment where you want to take defensive action and sell.
Before making any investment decisions, be sure to check current market conditions and use IBD Stock Checkup to see if your stock gets passing ratings for the most important fundamental and technical criteria.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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