Uncertainty over government regulations impacts Tesla share prices

Market volatility hits Tesla shares

What happened

Yesterday, Tesla (TSLA -6.46%) disclosed its delivery data for the first quarter, and as a direct result, the stock is currently trading lower. Despite the fact that the company delivered a record number of electric vehicles (EVs) during the first quarter, some investors were still underwhelmed. As of 10:30 in the morning, the price of the stock had fallen by 5.2%. On Monday night at EST.

Tesla stock drops after disappointing sales numbers
Investor concerns over supply chain issues weigh on Tesla stock

Then what?

During the most recent quarter, the company produced a record number of electric vehicles (EVs), in addition to setting a new high mark for delivery volume. However, due to the fact that some investors must have believed the company’s performance fell short of expectations, the stock price has decreased. Before the delivery news was released, investors had high overall expectations, which helped drive the stock price up by about 8% over the previous week.

What’s Next?

After Tesla reduced the prices of their vehicles, there was a wide range of estimates regarding the company’s first-quarter deliveries. Some people anticipated that a surge in demand would enable the company to deliver more electric vehicles than it actually did. The estimates provided by the analysts ranged from as low as 410,000 to approximately 450,000. It, therefore, depends on which analysts you follow to determine whether or not the company met or failed to meet expectations.

When extrapolated to the remaining time in the year, the overall production of nearly 441,000 would still put the company slightly behind its own guidance for 1.8 million EVs for the full year. Those investors who were let down may have, however, been unaware of two important details.

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To begin, the data pertaining to the production and delivery of heavy-duty semi-trucks was omitted from the findings. Perhaps even more importantly, the company’s two newest factories, located in Texas and Germany, continue to build up their production capacity. If demand continues to be high throughout this year and those firms continue to grow production, then extrapolating first-quarter production to the balance of the year isn’t really applicable.

During the course of the previous year, one of the things that caused concern was the widening gap between output and deliveries. Fans of Tesla were left wondering whether this indicated that inventory was increasing or whether there were difficulties with logistics. However, that was a significant positive development in the first quarter. During the previous quarter, Tesla produced approximately 8% more automobiles than it actually delivered. However, during the first three months of the year, the gap shrunk to just 4%.

Therefore, transportation logistics have unquestionably improved, and this appears to provide further evidence that there was not an inventory buildup as a result of falling demand. This is excellent news for shareholders, and it further helps to illustrate that today’s reaction in the market doesn’t make a whole lot of sense. When Tesla reports its complete financial results for the first quarter on April 19, which is less than three weeks away, investors will receive even more information than before.

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