NEW YORK – It’s difficult to imagine a time when the conversation around shares of Tesla will be entirely drama-free. But an analyst noted earlier this month that things seemed “low-controversy” lately, and the electric auto maker’s shares are up 9% in September.
That should perhaps be taken with a grain of salt. Tesla stock, which finished Friday down 0.3% to $245.20, is still down 27% for the year. The shares remain closer to the prices below $180 they touched in June than the roughly $333 at which they finished 2018.
But given the stock’s bumpy ride so far this year, investors may see that as a victory as the third quarter winds down.
Lately, CEO Elon Musk’s tweets have been largely product-focused, highlighting future powertrain options and the performance of his vehicles on test tracks as more potential competitors, including the $150,000 Porsche Taycan, have appeared on the scene.
But the focus will inevitably return to matters of more immediate interest to investors. Tesla generally updates investors about quarterly production and delivery numbers shortly after each quarter’s end, and that next missive is perhaps three weeks away now.
Meanwhile, investors have interpreted various bits of news, including the launch of an insurance product and some tax support from China’s government, as worthy of optimism. The U.S. auto market is generally considered stronger than the rest of the world’s, which could be seen as a double-edged sword for Tesla since it sells largely here but wants to grow abroad.
Other factors, including a public legal spat with Walmart over Tesla solar systems and concerns about trade and global economic health – Bank of America Merrill Lynch analysts said Friday that auto sector stocks “may not trough until the early-mid 2020s” – seem to have been back-burnered.
Second-quarter results, reported in late July, led to a drop in the shares, with investors unhappy with the sense that the company might not do much better than break-even in the third quarter even as Musk said Tesla was “at the point of being self-funding, and we expect to be free cash flow positive in future quarters.”
The company’s full-year delivery guidance may be the principal reason for that. Wall Street currently expects about 97,000 deliveries for the third quarter, according to FactSet, up slightly from the second; that would bring the year-to-date total to around 255,000.
During recent investor meetings with Tesla, RBC Capital Markets analyst Joseph Spak wrote this week, the company, unsurprisingly, didn’t drop any big hints about the Q3 number. In July, management pointed at an increase from Q2 numbers.
The low end of the company’s full year guidance is 360,000. If the second half ends as Wall Street expects, Tesla would just make it. Success surely won’t silence its critics, but failure would be a sure ticket to a return to more drama.