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The positive performance of Tesla (TSLA) stock can be attributed to the operations of its Shanghai Giga factory. 14,954 Model 3 vehicles were manufactured and delivered in June.
Popular electric auto manufacturer Tesla Inc (NASDAQ: TSLA) has surpassed expectations as its sales were boosted in June. The company’s sales delivery was enhanced with the Tesla Shanghai factory’s sales of the Model 3 brand driving sales up by 35% in June. Tesla has made headlines in the past weeks as a leaked email from the company’s CEO Elon Musk brought a lot of anticipation on Wall Street. Elon Musk tipped that the company will turn in a fourth consecutive quarterly profit to increase the possibilities of Tesla been drawn into the S&P 500.
Tesla as a company has shown unprecedented growth in the past 52 weeks, a period during which it recorded a low share price of $211.00 and an all-time high of $1,429.50. On Monday alone, Tesla stock rose a further 13.48%, ending the day at $1371.58 per share. The company closed trade on Tuesday with a gain of 1.33% to close at $1,389.86. 30 days ago, TSLA was trading at around $950 which means that it has added around 30% since then. This upward tick comes as most top tech firms in the U.S. are plummeting from their profitable runs.
Tesla in Numbers
The profitability of Tesla lies in the company’s ability to deliver its electric cars. The turn of 2020 and the detrimental impacts of the Coronavirus induced lockdown saw the company produce 102,627 vehicles in Q1 2020 while the complexities of the global supply chain caused it to deliver just 88,400 (76,200 of Model 3/Y and 12,200 Model S/X). The company defied all odds and posted profitability in the same quarter.
The recently revealed Q2 figures stunned the company’s critics as Tesla surpassed its anticipated delivery of 72,000 to a record of 90,650 vehicles. The surpassed expectation have incited analysts to predict the possibility of the company turning in over 750,000 vehicles per year from 2021.
“If the company can manage 90K units during an extraordinarily challenging quarter, there is no reason that TSLA cannot be shipping 130K to 140K units a quarter by the end of the year in our opinion. That puts TSLA on a trajectory to ship 757K units in 2021,” JMP Securities analyst Joe Osha noted.
The performance of TSLA in Q2 2020 can best be appreciated when it is compared to other notable auto giants around the world. TESLARATI reported that General Motors Company (NYSE: GM), for example, had a drop of 34%, Fiat Chrysler Automobiles NV (NYSE: FCAU) took a 39% hit, and Toyota Motor Corp (NYSE: TM) showed a decline of 35% year over year.
Shanghai Factory Performance as Tesla Stock Booster
The positive performance of the Tesla brand can be attributed to the operations of its Shanghai Giga factory. 14,954 Model 3 vehicles were manufactured and delivered by the Shanghai factory. In July 2018, Tesla signed an agreement with Chinese authorities to build a factory in Shanghai, China, which is Tesla’s first Gigafactory outside of the United States. The groundbreaking ceremony was held on January 7, 2019. The factory building was finished in August 2019, and the initial Tesla Model 3s were in production from Giga Shanghai in October 2019 contributing to the recorded boost experienced in Q4 2019.
The figures are out, TSLA has recorded yet a profitable run. While we await the company’s potential listing on the S&P 500, Tesla has attracted sentiments in which observers believe its shares will rise up to a record of $7,000 in the next 5 years. These projections may be enhanced if the stock gets listed in the S&P 500 as the index will cushion the stock from its weird volatility.
The company’s stance on service delivery is also a catch for customers as Tesla’s stated philosophy is not to make a profit on service. Tesla offers service at company-owned service centers and mobile technicians can also perform most inspections and repairs. In 2016, Tesla recommended having any Tesla car inspected every 12,500 miles or once a year, whichever comes first. In early 2019, the manual was changed to say: “your Tesla does not require annual maintenance and regular fluid changes,” and instead it recommends periodic servicing of the brake fluid, air conditioning, tires, and air filters. This additional perk is causing the company to gain larger market shares.
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