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Investors Business Daily
Investors Business Daily

Tesla Stock Races Ahead On Strong Deliveries; Startup Rival Polestar Partners With Hertz

Tesla reported "better than feared" first-quarter deliveries as CEO Elon Musk disclosed a sizable stake in Twitter. Meanwhile, startup Tesla rival Polestar partnered with car rental giant Hertz. Twitter stock surged, Tesla stock rose solidly, and Hertz shares popped. 

Austin-based Tesla delivered 310,048 vehicles in the third quarter, just below Wall Street estimates of 312,000 and 0.8% below its own estimates. But Wedbush analyst Daniel Ives says that was "better than feared."

Analysts were bracing for a lower number as recent Covid shutdowns in China had shuttered Tesla's Shanghai plant and created "massive logistics complications delivering units to customers in Europe," said Ives in a note to clients on Saturday.

Ives estimates 20,000-25,000 units were pushed out of Q1 into Q2. Tesla delivered 295,324 Model 3/Y vehicles vs. views for 300,000. It delivered 14,724 Model S/X cars vs. projections for 13,400. Production in the quarter was 305,000 units.

"Relative to other automakers such as GM and Ford as well as Chinese EV players such as Nio, Xpeng and others, we view these delivery and production numbers as a positive step in the right direction for the next step of the Tesla growth story to take hold with Berlin and Austin factories now green lighted," Ives wrote.

Tesla's factory in Berlin opened on March 22, while it's Austin plant is slated for an opening event on April 7.

However, the war in Ukraine and persistent parts shortages will continue to make achieving delivery targets difficult.

"This was an 'exceptionally' difficult quarter due to supply chain interruptions & China zero COVID policy," Musk tweeted Saturday morning. 

Nevertheless, CFRA Research analyst Garrett Nelson said in a note to clients Monday that Tesla's "supply agreements signed with mining companies position the company to navigate battery raw materials shortages more successfully than competitors."

Musk Takes Stake In Twitter

In a regulatory filing on Monday, Twitter revealed Musk now owns 73.5 million shares of the social media company, representing a 9.2% passive stake. The stake is worth $2.89 billion.

The stock buy is surprising given Musk's criticism of Twitter for "failing to adhere to free speech principles." The purchase also comes amid Musk's musings on Twitter recently about starting his own social media platform to compete with Twitter. 

"Instead it looks like Elon has his eyes laser set on Twitter and we would expect this passive stake as just the start of broader conversations with the Twitter board/management that could ultimately lead to an active stake and a potential more aggressive ownership role of Twitter," Ives said.

Tesla Rival Partners With Hertz

Meanwhile, Tesla Rival Polestar has inked its own deal with car rental giant Hertz. The rental car leader said Monday it will purchase 65,000 Polestar EVs over the next five years. Most of the vehicles will be the EV maker's sporty Polestar 2 sedan. 

Drivers can expect to see Polestar's vehicles on Hertz lots beginning in the spring in Europe and later this year in North America and Australia.

Polestar is not publicly traded yet, but is going public via a SPAC merger with Gores Guggenheim.

Tesla's deal with Hertz was announced in October 2021. Hertz said it had ordered 100,000 Tesla Model 3s, which it expects to receive in late 2022. Hertz plans to rent out 50,000 of those cars to Uber.

Tesla Stock

Shares jumped 5.6% to 1,145.45 on the stock market today. Tesla stock has a 1,208.10 cup-base buy point, according to MarketSmith chart analysis.

Its relative strength line is ticking upward near all-time highs. Tesla, a Leaderboard stock, has an RS Rating of 95 out of possible 99, while its EPS Rating is 75.

Polestar SPAC partner Gores Guggenheim jumped 11.9% to 12.82, a four-month high.

U.S.-based EV rivals Lucid added 2.7%, while Rivian reversed early losses and edged up 0.2%.

Among other carmakers with a growing slate of EVs, General Motors edged up a fraction and Ford edged into narrow losses.

Tesla's China-based rivals Nio, Xpeng and Li Auto added 8.8%, 7.6% and 5.2%, respectively. Warren Buffett-backed BYD popped 8.8% on strong deliveries.

Twitter stock gapped up 27%, while Hertz shares rose 10.7%. 

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.

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