Tesla’s Stock Registers Two-Day Dip, Despite Second-Quarter Production Milestone

Tesla electric car
David Zalubowski / AP Images

Although Tesla hit its Model 3 production target of 5,000 vehicles for the last week of the year’s second quarter, investors remain wary about the electric car company’s finances and demand trajectory.

Tesla shares plummeted 7.2 percent on Tuesday, after a 2.3 percent dip on Monday, despite a positive opening this week.

While Tesla reached its one-week goal, as the Inquisitr reported earlier, it failed to deliver on its quarter aspirations of approximately 51,000 cars. The company rolled out some 10,000 less autos.

The shortcoming comes under further scrutiny in a Reuters report that Elon Musk had to pull employees from other departments to work on Model 3s. Weekend shifts also helped speed up the sedans’ production, while Model S and X were left on the backburner.

Tesla also erected a tented assembly line outside of its main factory – which contributed 20 percent of the Model 3s manufactured last week – to remain on schedule.

Mid-day Tuesday, Business Insider broke the news that Musk rescinded a “brake-and-roll” test, a crucial safety measure according to industry experts, in the Fremont, California, plant. The publication purportedly reviewed Tesla internal documents that cataloged the suspension before 3 a.m. on June 26.

Responding to CNBC, however, Tesla characterized the tests as redundant, further stating,

“Every car we build goes through rigorous quality checks and must meet exacting specifications, including brake tests. To be extremely clear, we drive *every* Model 3 on our test track to verify braking, torque, squeal and rattle. There are no exceptions.”

Wall Street Journal reported that some 40 percent of the Model 3s produced from April to June have yet to be delivered to customers. The paper’s Charley Grant also notes that after all the hype of mass producing Model 3s, the line is yet to rake profit.

On Monday, Tesla announced 420,000 Model 3 reservations – around 30,000 less than last year – whose delivery dates stretch anywhere between six months to a year and a half.

“Model 3 deliveries did miss our bearish estimates and we see the incremental color on Model 3 net reservations (where the company showed its first declining data point) as incrementally negative,” analyst David Tamberrino said in a note to clients.

With a mixed production and demand success, Tesla’s stock could further drop once the company posts its second-quarter earnings, pundits argue.

“Given the softer overall trend to deliveries and implied negative read-across to 2Q earnings and cash flow, we expect a negative reaction in TSLA shares,” J.P. Morgan analyst Ryan Brinkman said in a note to clients as cited by CNBC.

He predicts a $180 price target for Tesla’s shares, which he rates underweight.