A wave of pessimism that has hurt
stock in recent days may be starting to recede.
Stock in the electric-vehicle pioneer was on its way to a fourth consecutive daily decline when the shares turned around in midday trading Friday. Two factors—both related to 2021 performance—may be making investors more upbeat heading into May.
Tesla (ticker: TSLA) stock started out the week at about $729 and closed Monday at $738.20, ahead of the company’s first-quarter earnings report that afternoon. Earnings were higher than Wall Street expected, but questions about the quality of the reported earnings—the degree to which trading in Bitcoin and sales of regulatory credits for producing zero-emission cars lifted the number–sent the stock lower. Lingering concern over a recent crash of a Tesla vehicle in Texas dragged on the price too.
The stock opened Friday at about $668, $71 lower than Monday’s close, and down 1.4% from Thursday’s final level. By early afternoon, though, shares rose as high as $715.47, up about $49, or 7.4%, from the daily low of $66.14. The
Dow Jones Industrial Average,
for comparison, were down about 0.6%.
The stock-price bounce might just be a relief rally marking the end of the post-earnings selling spree. But two bits of news, both communicated via
(TWTR), appear to be at work as well.
New Street Research analyst Pierre Ferragu tweeted out Thursday that
(STM.France) believes its revenues from sales of silicon carbide will hit $550 million in 2021. The company said as much on its April 29 earnings conference call. when CEO
talked about capacity expansion. “I mentioned in January something in the range of $450 million, $500 million,” he said. “Now it will be well about $550 million.”
It matters because according to Ferragu, STMicro is Tesla’s sole supplier of silicon carbide,. What’s more, he says Tesla accounts for 80% of the company’s silicon-carbide sales, and that sales of $550 million imply Tesla would produce as many as 1 million vehicles.
Wall Street is looking for 800,000 Tesla deliveries in 2021. A million vehicles would be an enormous surprise.
In the filing, Black noted, Tesla’s board of directors said it is “probable” that Tesla’s annualized sales will hit $55 billion, a milestone that would trigger a grant of stock options to CEO
Wall Street analysts believe Tesla’s 2021 sales will be less than $50 billion, so a figure of $55 billion would be a second enormous surprise for investors.
Black is a former Wall Street analyst and money manager who has amassed almost 74,000 followers tweeting about stocks, including Tesla. Ferragu, for his part, rates Tesla share at Buy and has a $900 price target for the stock.
Write to Al Root at [email protected]