What happened

Following an absolutely brutal May in which Tesla (NASDAQ:TSLA) stock slumped 22% as Wall Street largely panned the electric vehicle (EV) and solar solutions company, shares rebounded 20.7% in June, according to data from S&P Global Market Intelligence, amid assertions by CEO Elon Musk that the company could set a fresh quarterly record for vehicle deliveries and production.

Red Tesla roadster in motion.


So what

Perhaps it was happenstance that Tesla stock hit its lowest levels since late 2016 on the first trading day of last month. Nonetheless, with that low mark established, it promptly began to rebound early last month despite a rising chorus of concerns (may require subscription) over whether demand for Tesla's vehicles was great enough to meet its aggressive guidance for 360,000 to 400,000 vehicle deliveries in 2019.

It certainly helped when, on June 5, JMP Securities analyst Joseph Osha cited May EV registration data to argue demand for Tesla's affordable Model 3 sedan "continues to be solid." Osha followed by reiterating his outperform rating on Tesla stock but simultaneously reduced his per-share price target to $347 at the time (still an enormous premium even from today's price of around $235).

Sure enough, a week later, Musk himself insisted at Tesla's annual shareholder meeting that there was no demand problem, adding that orders and sales "for the Model S, X, and 3 [were] outpacing production" and giving them a "decent shot" at setting fresh records for production and deliveries.

Now what

Indeed, Tesla shares went on to jump as much as 7.6% yesterday (then settled to close up nearer to 5%) after the company did exactly that, setting a fresh high mark with 87,048 vehicles produced and 95,200 vehicles delivered in the second quarter. The latter marked growth of 134% year over year, 51% sequentially from last quarter, and was well above Wall Street's average estimates for 91,000 deliveries.

Tesla elaborated that it entered the third quarter with an increase in order backlog, as orders generated exceeded deliveries, and that it made "significant progress streamlining [...] global logistics and delivery operations at higher volumes, enabling cost efficiencies and improvements to [its] working capital position."

Make no mistake: That's a good thing for margins considering the vast majority of Tesla's Q2 deliveries (77,550) were the lower-priced Model 3 variety.

Still, many industry watchers continue to express skepticism for whether this demand is truly sustainable over the longer term -- though given current visibility, Tesla believes it should be able to continue growing production and deliveries at least into the third quarter.

We'll hear more to that end when Tesla releases its final second-quarter results either late this month or in early August. But given its encouraging progress in the meantime -- and relentless prodding from Tesla bears notwithstanding -- it was no surprise to see the stock bouncing higher in response.