Actions of Tesla (NASDAQ: TSLA) rose more than 4% on Wednesday, approaching the historic high. The upward movement in the growth stock comes with several analysts expressing optimism about the automaker’s chance of reaching its ambitious target of 500,000 vehicle deliveries in 2020.
Achieving half a million vehicle deliveries in 2020 would be an impressive milestone for Tesla in the face of substantial obstacles. Tesla faced unexpected setbacks this year when the company was forced to temporarily close its factories in compliance with government orders to stop production to help stem the spread of COVID-19.
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What analysts are saying
Both Credit Suisse analyst Dan Levy and Wedbush analyst Daniel Ives believe the electric car maker should report fourth quarter deliveries high enough to meet Tesla’s guidance for 500,000 deliveries this year – a figure that is over 368,000 deliveries in 2019.
Levy believes that Tesla will deliver about 183,000 vehicles in the fourth quarter. Highlighting how significant this would be, it would represent a sequential growth of 31% and a growth of 63% over deliveries in the fourth quarter of 2019.
Ives is even more optimistic in Tesla’s fourth quarter, noting that 190,000 to 200,000 deliveries are possible for the period. This forecast is based on its own demand analysis and global delivery trends for Tesla vehicles.
Nothing is in the bag yet, however. The opinions of both analysts represent predictions, not facts. Not only can they be wrong, but there is still time for things to go wrong with deliveries. Ives, for example, notes that delivery logistics in Europe may postpone some deliveries to the first quarter of 2021.
However, Ives expressed confidence in Tesla’s potential to 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 plants (second only to its main plant in Fremont, California).
Stay focused on the long term
While the views of these analysts are interesting, investors should focus on the long term.
The completion of potentially strong deliveries in the fourth quarter should not necessarily have any impact on the company’s stock price movements in the short term. Instead, investors should assess what the reported deliveries imply about the long-term view of Tesla’s vehicle demand path. If Tesla can increase deliveries 31% sequentially and 63% year after year, it would suggest that the company could still be at the beginning of its growth history.
Unfortunately, investors are unlikely to get more specific information about how demand for their vehicles is going until Tesla reports its fourth quarter financial results. The company generally releases its fourth quarter update in late January or early February.
In the meantime, however, it is worth checking how many vehicles Tesla delivers in the fourth quarter. But investors shouldn’t be too concerned about this, as it is only a quarter.
Tesla typically reports its fourth quarter vehicle deliveries sometime between January 1 and 3.