Tesla Deliveries Crushed Expectations. Here’s What Happens Next

Another quarter, another record. Tesla is growing rapidly, despite a global automotive semiconductor shortage roiling production.

The electric vehicle pioneer on Saturday reported a record quarter with deliveries up more than 70% year over year. Calling the stock reaction on Monday is a coin flip, but one day’s stock performance doesn’t really matter. Strong deliveries, however, usually mean good news for Tesla bulls down the road.

Tesla (ticker: TSLA) delivered 241,300 vehicles in the third quarter of 2021, up from about 201,000 delivered in the second quarter of the year, and up from about 140,000 delivered in the third quarter of 2020. Wall Street was looking for roughly 225,0000 to 230,000 vehicle deliveries.

Tesla produced almost 238,000 vehicles in the third quarter. Production and deliveries—to customers—are typical close to one another.

Year to date, Tesla has delivered more than 627,000 vehicles, up almost 100% compared with 2020.

The results should be good enough to keep the stock stable Monday. The bigger reaction to strong deliveries typically come in the weeks following the release of the figures.

Tesla stock has outperformed the S&P 500 six out of the past eight times in the span between reporting deliveries and reporting quarterly earnings. Quarterly earnings come about three or four weeks after delivery results.

Quarterly deliveries have set new records seven of the past eight quarters. That’s unsurprising for a growth stock such as Tesla. But record deliveries don’t always mean Tesla stock jumps immediately following any quarterly release. Expectations, of course, matter more than the actual number. And expectations for third quarter deliveries have been rising.

Expectations for third quarter deliveries have migrated up from roughly 220,000 to 225,000 to 225,000 to 230,000 over the past couple of weeks. In fact, rising expectations are a big reason Tesla stock has outperformed recently.

Tesla stock has looked remarkably stable in the face of recent market volatility. Shares are up 0.1% over the past week. The Nasdaq Composite dropped 3.2% over the same span. The S&P 500 is 2.2%. What’s more, Tesla stock rose about 5% in September. The Nasdaq dropped 5%. Stock in Chinese EV maker NIO (NIO) dropped 9%.

Investors get inured to good news, too. Tesla stock rose 4.4% after first quarter 2021 deliveries were reported. Shares rose only 0.1% after second quarter deliveries were reported. The second quarter figure, another record, was the first time Tesla cracked 200,000 vehicle deliveries.

Overall, Tesla has appear to have passed the third quarter delivery test. And more cars delivered should mean analysts take earnings estimates up for third quarter earnings. That might be the reason Tesla stock is strong following earnings.

But good news can also be just good news.

Before earnings, Tesla hosts its annual meeting on October 7. At that event, investors will want to hear about production ramp ups at the company’s two new facilities in Texas and Germany.

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