Feature China: Barcroft Media via Getty Images
- Tesla shares rose by more than 3% on Tuesday after data showed the company's sales in China increased 29% in May.
- The rise in May sales follows a pullback in demand that was logged in April.
- Tesla should be on track for a 300,000 run-rate for deliveries in June, said a Wedbush analyst.
- See more stories on Insider's business page.
Tesla shares gained more than 3% early Tuesday after data from China showed the electric vehicle maker's sales in May bounced back after a slump the month before.
The company in May sold 33,463 vehicles that it made in the country, an 29% increase from April, according to the China Passenger Car Association. The figures included 21,936 vehicles sold domestically and 11,527 units exported to Europe.
Shares of Tesla were up by 2.8% after rising as much as 3.4% to $625.99 ahead of the opening bell.
The increase comes after April's slide of 27% to 25,845 locally made Model 3 and Model Y vehicles from the prior month, with that data also coming from the CPCA.
"There was a lot of nervousness on the Street heading into the CPCA numbers," after April's soft numbers, said Wedbush analyst Dan Ives in a note Tuesday. 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," as May sales exceeded 20,000, he said.
Tesla shares have lost about 15% so far this year, in part as the company has faced rough publicity in China related to perceived safety and quality concerns such as battery fires and unintended acceleration. Meanwhile, a report in early June from The Information said Tesla's orders in China dropped by nearly 50% in May to about 9,800 cars compared with the previous month as the company's popularity was suffering in one of its most important markets.
The second quarter "clearly got off to a shaky start for Tesla in China, however, in the month of May it reversed and we believe the pent up demand story remains firm for Tesla for the next few years," said Ives, adding that the company starting in June should be on track for a 300,000 run-rate for deliveries. Wedbush has an outperform rating on Tesla with a $1,000 price target.
Source: Read Full Article