Tesla stock was rising on Monday after the electric vehicle maker rolled out its first Cybertruck on its assembly line in Austin, Texas. The electric van is the company’s first major launch since the Model Y in early 2020.
The new truck is entering an increasingly crowded market for electric trucks. Rivian Automotive (Ticker: RIVN) has its own R1T battery-powered truck. Ford Motor (F) builds the F-150 Lightning. General Motors will launch the electric Silverado this year.
Rivian’s business is mostly electric pickups, so it makes sense that its shares would react more to the three on Monday, with a loss of 0.9% in premarket trading. Ford and General Motors stocks weren’t doing much.
Tesla shares got a boost from Cybertruck, rising 1.6% to $286. futures on
Standard & Poor’s 500
decreased by 0.1%.
NASDAQ Composite
Futures contracts are flat.
A point to remember is that one truck won’t be enough to help Tesla stick around for long. How many Cybertrucks Tesla can build and deliver in the second half of 2023 will go a long way to determining how the stock performs for the rest of the year.
The arrival of the Cybertruck is something positive for the company, but there are still a lot of questions to be answered. Prices were originally set between $40,000 and $70,000, but that was back in 2019, before inflation took hold.
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It’s not clear if Tesla will keep original prices for all early orders and what that means for margins.
Some answers may be forthcoming in Tesla’s second-quarter earnings report, scheduled for Wednesday night. Wall Street expects Tesla to generate about $2.7 billion in operating profit from $24.8 billion in sales, compared with $2.7 billion in profit from $23.3 billion in sales in the first quarter. Estimates for the second quarter don’t seem like a stretch, especially since Tesla delivered more than 466,000 cars in the second quarter, up from about 423,000 in the first quarter.
Second-quarter estimates indicate that Wall Street believes Tesla’s operating profit margins will remain in the 11% range, slightly lower than in the first quarter. This may also be conservative, but analysts don’t want to get burned again. Tesla’s operating profit margins fell short of expectations for the first quarter and shares fell nearly 10% after the earnings announcement on April 19th.
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“This should be the low point for the auto margin, but commentary on future price cuts versus margin benefits will be key,” Baird analyst Ben Callow wrote Monday, in a preview of the quarterly report. “Tailwinds on margin should outweigh additional price adjustments.”
Kallo rates Tesla stock as a Buy. He raised his target for the share price to $300 from $252 a share on Monday.
As Monday trading approaches, Tesla stock is up about 70% since the post-earnings decline and nearly 130% so far in 2023. Several factors have boosted the stock, including higher deliveries, and deals with the automakers that allowed them to use the charging network. Supercar from Tesla for their services. Electric vehicles and e-trucks that are approaching.
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The oddly shaped pickup won’t help margins in the second quarter, but investors will still be interested in an update on it on Wednesday.
Analysts expect about 10,000 Cybertruck deliveries for all of 2023. If Tesla is bringing the truck off the assembly line now, that estimate could turn out to be a soft spot. The Cybertruck’s body panels are made of stainless steel, which is unusual. And the frame uses some of Tesla’s new technologies. It was even more difficult to bring to market than the Model Y. However, Tesla built approximately 80,000 Model Ys in its first three quarters of production.
Write to Adam Clark at [email protected]
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”