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Tesla Shares Rise on Big Q4 Delivery Expectations

By Daniel Sparks - Dec 30, 2020 at 3:25PM

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Two analysts think Tesla may hit its ambitious full-year target for vehicle deliveries after all.

Shares of Tesla ( TSLA 1.64% ) are up more than 4% on Wednesday, nearing all-time highs. The growth stock's move higher comes as several analysts express optimism about the automaker's shot at hitting its ambitious target for 500,000 vehicle deliveries in 2020.

Achieving a half-million vehicle deliveries in 2020 would mark an impressive milestone for Tesla in the face of substantial obstacles. Tesla endured unexpected setbacks this year when the company was forced to temporarily shut down its factories as it adhered to government orders to pause production to help curb the spread of COVID-19.

A chart showing a stock price rising.

Image source: Getty Images.

What analysts are saying

Both Credit Suisse analyst Dan Levy and Wedbush analyst Daniel Ives think the electric-car maker is likely to report fourth-quarter deliveries high enough to meet Tesla's guidance for 500,000 deliveries this year -- a figure that is up from about 368,000 deliveries in 2019.

Levy thinks Tesla will deliver about 183,000 vehicles in Q4. Highlighting how significant this would be, it would represent 31% sequential growth and 63% growth over deliveries in the fourth quarter of 2019.

Ives is even more bullish on Tesla's fourth quarter, noting that 190,000 to 200,000 deliveries for the period are possible. This forecast is based on his own analysis of demand and global delivery trends for Tesla vehicles.

Nothing is in the bag yet, however. Both of these analysts' views represent forecasts, not facts. Not only could they end up being wrong but there's still time for things to go wrong with deliveries. Ives, for instance, notes that delivery logistics in Europe could postpone some deliveries into the first quarter of 2021.

Nevertheless, Ives voiced confidence in the potential for Tesla to exceed many other analysts' delivery expectations for 180,000 vehicles this quarter. Ives is particularly optimistic about strong demand for Tesla vehicles in China, where Tesla has one of its most productive factories (second only to its main factory in Fremont, California).

Stay focused on the long term

While these analysts' opinions are interesting, investors should stay focused on the long haul.

The takeaway from potentially strong fourth-quarter deliveries shouldn't necessarily have any impact on the company's near-term stock price movements. Instead, investors should assess what the reported deliveries imply about the long-term view of the demand trajectory for Tesla's vehicles. If Tesla can grow deliveries 31% sequentially and 63% year over year, it would suggest that the company could still be early in its growth story.

Unfortunately, investors won't likely get more specific information on how demand for its vehicles are faring until Tesla reports its fourth-quarter financial results. The company usually releases its Q4 update in late January or early February.

In the meantime, however, it's worth checking on how many vehicles Tesla delivers in Q4. But investors shouldn't get too hung up on it, as it's just one quarter.

Tesla typically reports its fourth-quarter vehicle deliveries at some point between Jan. 1 and Jan. 3.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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