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Tesla’s Stock Soars 7 Percent, Thousands of Model 3 Orders Cancelled
The company said it remains on pace to produce over 10,000 Model 3s per week by the end of 2018.
It’s been an interesting week for electric vehicle manufacturing mammoth, Tesla (NASDAQ:TSLA), whose share price jumped nearly 7 percent on Thursday (August 3), following the release of its Q2 results on Wednesday (August 2).
According to the company’s press release, Tesla’s Model 3 production remains on pace to achieve its target date, and expects “positive Model 3 gross margin” in Q4 of 2017. The release further stated that the company averaged roughly 1,800 Model 3 reservations on a daily basis, stating the company is “confident” that it can produce over 1,500 vehicles by Q3.
In a conference call with investors on Wednesday afternoon, Tesla CEO Elon Musk said that the company expects to reach a production rate of 10,000 vehicles per week by the end of 2018, with plans to produce 500,000 vehicles by 2018 as well.
“We remain, we believe, on track to achieve a 5,000 unit per week by the end of this year,” he said. Musk also reiterated that people should have “zero concern” about the company’s ability to achieve 10,000 units produced per week by the end of 2018.
That said, Reuters reported on Thursday that skepticism looms as to how realistic Tesla’s production targets are. RBC Capital Markets analyst Joseph Spak said [they] don’t have “meaningful reason” to doubt that Tesla will eventually reach its targets.
“Doing so in a timely manner without some growing pains could prove challenging,” Spak said in a note.
Despite Musk’s assurance that Tesla will reach its target goals for next year, Musk also said during the conference call that 63,000 people have canceled their Tesla Model 3 orders in the last year, which translates to 1,800 per day. According to Musk, orders dropped from 518,000 to 455,000, but he didn’t seem overly put off by the the number of cancellations.
“It’s like, if you’re a restaurant and you’re serving hamburgers and there’s an hour and a half wait for the hamburger, do you really want to encourage more people to come order hamburgers?” Musk said on the call. “It doesn’t make sense. So I think it’s neither here nor there, but I wanted to make sure there was not a misunderstanding.”
Since last Friday (July 28), Musk said the company has averaged 1,800 orders per day despite the cancellations.
Year-to-date, shares of Tesla have increased over 63 percent to $346.20, although Business Insider reported on Thursday that the company’s stock price increase is “crushing short sellers.”
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.