is-tesla-stock-a-buy-after-turning-in-a-robust-report-on-deliveries?

Is Tesla Stock A Buy After Turning In A Robust Report On Deliveries?

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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, following its first-quarter report on vehicle deliveries that easily beat estimates, is Tesla stock a buy?

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Tesla delivered 184,800 vehicles, jumping 109% from a year ago and 2.3% from the fourth quarter. It defied predictions for a sequential decline. Analysts on average had forecast 168,000, according to FactSet.

The electric car leader beat estimates despite the growing number of electric vehicle competitors and the global chip shortage weighing on production across the industry

After the report, Wedbush analyst Dan Ives upgraded Tesla stock to outperform, from neutral, and raised his price target to 1,000, from 950. Ives also added Tesla to his list of “Best Ideas.”

“We now believe Tesla could exceed 850,000 deliveries for the year with 900,000 a stretch goal, despite the chip shortage and various supply chain issues lingering across the auto sector,” Ives wrote in a note to clients.

Always one to make news, particularly with tweets, Musk recently tweeted it’s now possible to buy a Tesla with Bitcoin in the U.S. Customers outside the U.S. will be able to do so later this year. Tesla purchased $1.5 billion worth of bitcoin in early February.

Tesla stock has pulled back after delivering fourth-quarter results on Jan. 27 that missed earnings estimates.

The company reported adjusted earnings of 80 cents per share, missing estimates of 90 cents. Still, earnings leapt 95% from the year-ago period and was its sixth straight quarter of profitability. Revenue jumped 46% to $10.74 billion, topping estimates of $10.1 billion.

Since hitting a record high of 900.40 on Jan. 25, Tesla stock is down 23%.

A Transformative Year For Tesla

“This past year was transformative for Tesla,” the company said in written remarks with the earnings release. “Despite unforeseen global challenges, we outpaced many trends seen elsewhere in the industry as we significantly increased volumes, profitability and cash generation.”

Ives boosted Tesla’s delivery estimates for the second quarter, pegging Model 3 and Model Y deliveries at 166,000 vs. the prior view for 144,000. He sees Model S and X deliveries reaching 14,000 vs. about 13,000 previously, bringing the total unit estimate for the second quarter to 180,000 vs. 157,000.

“We are now modeling 2021 total unit annual deliveries to be 830,000 units vs. our prior number of 774,000 units,” Ives wrote.

Tesla’s Massive Expansion

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 — more than double the current production of other auto-making giants — so it’s now on a mission to rapidly expand its manufacturing capabilities.

Tesla took a big step with its third manufacturing plant, where construction is now underway near Berlin. It expects to complete the facility in March 2021, where it will produce the Model Y.

Tesla will build its fourth manufacturing plant near Austin, Texas. That factory will be Tesla’s largest, built on a 2,000-acre chunk of land. It will produce the Cybertruck and its big-rig truck called Semi, as well as the Model Y and Model 3. Tesla recently said Cybertruck deliveries won’t begin until early 2022, later than official targets for a late 2021 launch.

Mizuho analyst Vijay Rakesh has a buy rating on Tesla and price target of 775.

“TSLA remains on track to reach its long-term unit growth target of a compound annual growth rate of 50% as it ramps production globally,” Rakesh wrote in a note to clients.

List Of Tesla Competitors Growing

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). It will be a tough battle as all three car companies have reputations for quality cars.

Other serious competitors include Ford Motor‘s (F) Mustang Mach E, the I-PACE from Tata Motors‘ (TATA) Jaguar unit and the Audi eTron. Audi is owned by Volkswagen. Volkswagen’s Porsche arm also has the Taycan.

Tesla also faces tough competition in China. Rivals in China include Xpeng Motors (XPEV), backed by e-commerce giant Alibaba (BABA). Others competitors include Nio (NIO) and Li Auto (LI).

Electric vehicle sales are expected to grow by 40% to 1.8 million units in 2021 and reaching 6 million units in 2025.

And as Tesla expands manufacturing capacity in Shanghai to begin producing the Model Y crossover, it also recently raised roughly $5 billion in its third stock offering of the year.

Tesla Stock Gets High Composite Rating

The IBD Stock Checkup tool also provides a Tesla stock forecast. It shows that Tesla stock has an IBD Composite Rating of 91 out of 99. The rating means Tesla stock currently outperforms 91% of all stocks in terms of the most important fundamental and technical stock-picking criteria.

The stock also has a Relative Strength Rating of 95. The rating tracks market leadership. It shows how a stock’s price movement over the last 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.

Its relative strength line, which hit record highs in late January, has been trending downward. The relative 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.

Tesla Stock Forecast

Tesla stock is currently not a buy.

On Feb. 22, Tesla broke down through its key 10-week moving average, a critical support level. Shares also fell below its 50-day line, altogether triggering a sell signal.

On Monday, April 5, following its deliveries report, Tesla stock gapped above the 21-day line. After that, the 50-day line is the next key level for TSLA stock.

Tesla stock could be forming a new base, but it is too early for a new risk-optimal buy point.

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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