Tesla (TSLA) is up 7% premarket after the company reported better than expected second quarter deliveries. Importantly, the company also said that orders exceeded deliveries during the quarter, resulting in an increased backlog.
Demand concerns have dominated the narrative around the stock since the company reported weak first quarter results.
Chief Executive Elon Musk has insisted that the company has no demand problem, but he has lost at least some credibility over the years (or nearly all of it, if you ask the short sellers).
Logistical bottlenecks were the primary reason for the weak first quarter results, so a big rebound in second quarter deliveries was expected, but an increase in the backlog would indicate that demand for the mass-market Model 3 is quite strong.
The company delivered a record 95,200 EVs during the quarter, in-line with the company's 90-100K guidance.
Model 3 deliveries grew 320% yr/yr and 52% sequentially to 77,550 versus estimates near ~74K.
Model S/X deliveries fell 21% yr/yr but grew 46% sequentially to 17,650. Model S/X deliveries fell 44% back in the first quarter, which caused market participants to believe that demand fell off a cliff due to the Federal tax credit getting cut in half and perhaps to some cannibalization from the Model 3.
Tesla did make a concerted effort to move its older EV models via price cuts and incentives. Tesla did not reaffirm its 360-400K EV delivery guidance last night. What's more, the Federal tax credit got cut in half again as of July 1st, to $1,875, so demand may have been pulled forward into the second quarter.
As a result, demand and margin concerns aren't necessarily going away this morning.
The company also said it made significant progress streamlining global logistics and delivery operations at higher volumes, enabling cost efficiencies and improvements to its working capital position.
Good news is putting pressure on the short sellers, which represent more than 30% of the float.
Now focus will turn to the company's financials. In April, Tesla guided for a smaller net loss sequentially and a return to profitability in the third quarter.
Tesla will report second quarter financial results in the last week of July or early August.