Shares of Tesla (TSLA 1.56%) popped almost 3% at the open Friday. The stock gave back those gains, and was trading at nearly break-even as of 12:30 p.m. ET. But the reason for the early gains could bode well for further moves higher.
Tesla stock has been under pressure the past few months, dropping nearly 40% over that time. Much of the angst stemmed from uncertainty caused by supply chain disruptions and suspended operations in its Shanghai manufacturing plant. Those production delays were caused by government-imposed shutdowns to prevent the spread of COVID-19. But news out of the Chinese electric vehicle (EV) sector today may signal good news ahead for Tesla.
Chinese EV makers Nio, XPeng, and Li Auto reported their June delivery data this morning, showing they all recovered nicely from the headwinds. After analysts slashed expectations for Tesla's second-quarter deliveries, this may set the company up to outperform.
Nio's June deliveries exceeded the upper end of the estimate it provided on June 9 when it provided an update with first-quarter earnings. And the three Chinese EV companies combined for the highest monthly level of deliveries ever in June.
The June rebound from the Chinese automakers bodes well for Tesla, too. Analysts have slashed second-quarter delivery estimates mainly due to the production impacts in Shanghai. Some now predict Tesla will ship just 250,000 vehicles in the second quarter after it reported a record 310,000 in first-quarter deliveries.
Investors will be most interested to hear if the company believes it remains on track to increase deliveries 50% in 2022 versus last year. If the impact from delays at the Shanghai plant are muted from a strong June recovery, that projection may still be achievable. Today's news out of China has investors believing that might be the case.