Why Tesla Stock Popped Ahead of Second-Quarter Deliveries

Shares of Tesla (NASDAQ: TSLA) have been on the comeback trail recently, and that continued on the primary trading day of July. Shares of the leading electric vehicle (EV) maker were higher by 5.5% as of 11:10 a.m. ET Monday morning. The stock is now up by about 18% over the past month.

Today’s jump comes only a day before Tesla is anticipated to report its second-quarter EV delivery data. While estimates have been trending lower, delivery reports from Chinese EV makers today have investors feeling more optimistic about what the American company will say.

The essential Chinese EV market

The Chinese EV market has been crucial for Tesla, whose best factory is in Shanghai. Today, several Chinese EV makers reported strong June and second-quarter deliveries. Which may bode well for what Tesla has to share tomorrow.

Nio, Li Auto, XPeng, and the larger BYD all showed year-over-year growth in battery-electric vehicle (BEV) sales for the quarter. The period looked as if it would end on a robust note, as Nio delivered a monthly record 21,209 vehicles in June. That was nearly twice what it shipped in June 2023.

Many EV observers have been closely watching the larger BYD, whose BEV volume is more in keeping with that of Tesla. BYD sold greater than 426,000 fully electric vehicles within the second quarter, up about 21% 12 months over 12 months.

Tesla analysts have been lowering estimates for its second-quarter sales, with most up-to-date projections averaging about 420,000 EVs. That may be down from about 466,000 delivered within the prior-year period. It will even be the second quarterly period where BYD outsold Tesla to be the world’s largest EV seller.

With China’s EV market seemingly recovering, it could end in Tesla beating estimates. Even after that data is released, though, shareholders will need to proceed to listen to what Tesla says about profit margin when it releases its full second-quarter financial report. If the sales in China are coming from reduced prices, the boost in it shares is perhaps short-lived.

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Howard Smith has positions in BYD Company, Nio, Tesla, and XPeng. The Motley Idiot has positions in and recommends BYD Company, Nio, and Tesla. The Motley Idiot has a disclosure policy.

Why Tesla Stock Popped Ahead of Second-Quarter Deliveries was originally published by The Motley Idiot

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