What happened
Tesla (TSLA 3.47%) shares have been marching higher in 2023, more than doubling in the first half of the year. That momentum continued today after the company beat expectations for second-quarter vehicle production and deliveries. That helped Tesla stock jump another 6.9% to close this holiday-shortened trading day.
NASDAQ: TSLA
Key Data Points
So what
Tesla reported record second-quarter deliveries of more than 466,000 EVs from production of almost 480,000 units. That brings Tesla's 2023 production level to more than 920,500 vehicles and puts it on track for its projected 50% growth annual rate, which would result in about 1.8 million cars for the year.
Image source: Tesla.
The second-quarter results surpassed most analysts' expectations, bringing new positive momentum for the stock. The big question for investors is how much of a role price cuts played in driving demand and what that will mean for profit margins. Tesla will release that information when it reports its full second-quarter financial update after the market close on July 19.
Now what
Price reductions contributed to the drop in Tesla's gross profit margin, down to 19.3% in the first quarter after averaging 25.8% for all of 2022. That's still meaningfully higher than traditional automakers that have additional labor and dealer network costs.
But investors have also already priced much of that advantage into the stock's valuation. Tesla's market cap is nearly back to $900 billion after the stock's recent gains. The latest data shows that demand remains strong, though, and that means Tesla has much more room to increase production with its existing and future manufacturing plants. The company already has announced a facility will be built in Mexico, and there have been reports that there will be future announcements of facilities in other locations.
The stock may be richly priced, but there may not be much to stem its momentum -- at least until Tesla provides its second-quarter update in about two weeks.
