Tesla: Back on Track With Strong May China Numbers

Following April’s lackluster numbers, the Tesla (TSLA) bears were gathering for a feast ahead of the release of the China Passenger Car Association (CPCA) figures for May. In the end, there was little left for them to savour, as the EV leader appeared to bounce back from April’s worrying performance.

Tesla delivered 33,463 units in May, of which 21,936 were sold in the domestic market and 11,527 exported to Europe.

“This was a 29% jump from the month of April,” said Wedbush analyst Daniel Ives, “However, importantly the domestic cars sold in country were north of 20k as Tesla appears to have handled the shaky China PR issues (safety, big brother is watching-Beijing) and turbulence well as demand rebounded well ahead of expectations.”

Ives thinks the growth story appears to be back on track in “this linchpin region,” which starting in June, will put Tesla on a 300k run-rate for deliveries in China. A tough pill to swallow for all the “skeptics and haters piling on from the month of April,” a month which Ives thinks will prove to be “an anomaly rather than the norm.”

In fact, Ives anticipates a big growth spurt for the Chinese EV industry over the next couple of years, as “transformational consumer demand” will see EV deliveries double from the 5% they currently command out of total vehicle sales. Along with domestic stalwarts such has NIO, Xpeng and Li Auto, Tesla stands to be a major beneficiary.

Looking forward, Ives thinks it is not the “temporary” near-term chip shortage which will determine the company’s trajectory but rather Tesla’s ability to further penetrate the Chinese market, and the latest numbers amount to a “clear shot in the arm for the bulls.”

“Now its about Musk playing nice in the sandbox and making sure that Tesla does not see any further stumbles in China which is poised to represent 40%+ of global deliveries by 2022,” the 5-star analyst summed up.

All in all, there’s no change to Ives’ rating, which stays an Outperform (i.e., Buy) or price target, which remains at $1,000. The implication for investors? Upside of 64%. (To watch Ives’ track record, click here)

Ives, however, is one of Wall Street’s most fervent Tesla supporters and not all are reading from the same manual. The stock has a Hold consensus rating based on 10 Buys, 7 Holds and 6 Sells, while the $639.81 average price target implies shares will gain ~5% over the next 12 months. (See Tesla stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.