5 analysts discuss Tesla stock after Q2 deliveries beat

Tesla (NASDAQ:TSLA) on Tuesday reported its vehicle deliveries for the second quarter, showing a smaller-than-expected decline as aggressive price cuts and incentives helped boost sluggish demand.

The report propelled Tesla stock 10% higher on Tuesday, closing at the highest level in almost six months.

For the three months ending June 30, Tesla delivered 443,956 vehicles, a 4.8% decrease from the previous year but a 14.8% increase from the previous quarter. This exceeded Wall Street's average expectation of 438,019 vehicles, as estimated by 12 analysts polled by LSEG.

The deliveries included 422,405 Model 3 and Model Y units and 21,551 units of other models, such as the Model S sedan, Cybertruck, and Model X premium SUV. During this period, Tesla produced 410,831 vehicles.

Despite being slow to update its car lineup, especially compared to rivals in China who have introduced new affordable models, and facing high-interest rates that dampen demand, Tesla's overall performance was stronger than expected.

While Tesla does not provide a regional breakdown of sales, some analysts believe better-than-expected results in China and the United States contributed to the strong performance. In April, Tesla implemented another round of price cuts in key markets, including the United States, China, and Europe.

However, Tesla's sales in China, which include domestic sales and exports to Europe and other countries, fell by 17% in the second quarter compared to the previous year. The company did not provide a detailed breakdown of its China sales.

One of the highlights of Tesla’s Q2 update was Tesla Energy deploying 9.4 GWh of energy storage products, marking the highest quarterly deployment in the company's history.

Analysts comment on Tesla stock after positive deliveries report

 Morgan Stanley  (NYSE:MS): “While this is one of the first and only positive auto surprises of the year for Tesla, we still believe matching last year’s delivery number would be difficult to achieve. Tesla would have to grow 2H deliveries by around 6% YoY to hold volume flat.”

“A ‘show stealer’ from today’s update is the all-time record high stationary storage number for 2Q which is nearly 2x our forecast. As Gen AI acceleration spurs a multigenerational increase in energy demand, electricity generation, and data center investment, we believe investors will begin to pay more attention to Tesla Energy which we value at $36 per Tesla share ($130bn) as the business uniquely positioned to benefit from investment in the US electric grid accelerated by the AI boom.”

Canaccord Genuity: “While 1Q24 deliveries were likely impacted by supply issues, 2Q24 deliveries were likely bolstered by 1Q24 buyers waiting for delivery into 2Q24. As we stated last quarter when the market was overly concerned about demand, the truth about 2Q24 likely lies in the middle. The q/q decline in production indicates, at least to us, that global demand for Tesla remains subdued.”

“With new vehicle models beginning in 2025, and margins stabilization — we should be past the worst quarterly trends for Tesla — at least for a while. Based on our model, revenue and non-GAAP EPS growth both bottomed in 1Q24 — as shown in the chart below — and stocks tend to follow revenue and earnings growth.”

Bernstein: “Unit growth in FY Q2 declined YoY (-5%) for the second straight quarter, and we do not believe that Tesla will achieve its goal of growing unit deliveries this year unless it materially cuts price/provides very favorable financing, pressuring margins and free cash flow.”

“We do not see a lower-cost Model 2 arriving in volume before 2026, and anticipate that “new lower cost” models in 2025 will be relatively modest tweaks, akin to the Model 3 Highland, which are unlikely to meaningfully stimulate demand. Accordingly, we expect Tesla to face many of the same challenges next year, with even more intense competition.”

JPMorgan (NYSE:JPM): “Helping drive the positive reaction in Tesla shares Tuesday we think were three primary factors: (1) that Tesla sales did not fall by even more; (2) that the company finally reversed the trend of producing materially more vehicles than consumers wanted, which should help stabilize the earlier worrying trend in working capital and free cash flow; and (3) Tesla appeared to gain material traction in its energy storage segment, providing a much-needed counterbalance to its shrinking automotive business.”

RBC: “While there was a 33K production shortfall versus deliveries in Q2 (, Q1/24 saw the reverse. Moreover, over a 12-month period, there has been a relatively minor 19K delivery shortfall vs production, or just around 1% of deliveries. As such, we attribute the Q2/24 dynamic to a simple catch-up. Supply constraints should largely be in the rearview mirror at this point.”