Shulou(Shulou.com)11/24 Report--

Tesla shares closed up 6.9% on Monday, July 4. The announcement came after the electric carmaker released better-than-expected second-quarter delivery data, suggesting its plan to boost sales through discounts is working.

U.S. stocks closed up 6.9 percent on Monday at $279.82 a share, adding about $57 billion to a market cap of $886.9 billion. Data show Tesla shares have more than doubled this year, well above analysts 'target price. That prompted some brokers to warn that a strategy of deep discounting would hurt Tesla's margins.

Meanwhile, Rivian, another electric vehicle maker, also reported second-quarter deliveries on Monday, also beating market expectations. Rivian had struggled for months to boost production because of supply chain problems. The stock hit its highest level in more than four months, closing up 17.4 percent in holiday-shortened trading.

Analysts said steady demand and efforts to solve supply chain problems by developing internal drivers could help Rivian grab a bigger share in an increasingly crowded market.

Tesla's price cuts helped it deliver 466140 vehicles between April and June, up 10 percent from the previous quarter and 83 percent from the same period last year. The gap between Tesla's production and deliveries has also narrowed, from 17933 vehicles in the previous quarter to 13560 vehicles in the second quarter.

Gene Munster, managing partner at investment firm Deepwater Asset Management, said: "Tesla's price cuts are making a huge difference. Over the past seven quarters, deliveries have grown at an average rate of 50%. The second quarter marked a measurable step forward in growth. "

At least eight analysts raised their price targets for Tesla stock, several of whom said Tesla's goal of delivering about 1.8 million vehicles a year now seems conservative given that the company has already delivered about half of its new vehicles in the first six months of 2023.

The stock has a median target price of $210, about 20 percent below its last close. Tesla trades at about 62.9 times forward earnings, well above Ford's 8.82 times and fairly close to Amazon's 62.66 times.

Bernstein analyst Toni Sacconaghi said in a note: "The biggest concern for investors is profitability. We continue to believe Tesla will need to cut prices further this year and/or next to meet its sales targets, which could gradually depress margins. "

Tesla reported a gross margin of 19.3% for the first quarter. Wall Street expects that number to fall to 18.6% when the company reports second-quarter results July 19.

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