The move, which leaves Tesla up 15% on the year, might provide some insight into what markets are and aren't pricing in at a time when the COVID-19 pandemic is causing major near-term economic damage.
Tesla reported 88,400 Q1 vehicle deliveries, down from 112,000 in seasonally big Q4 but up from a depressed year-ago level of 63,000. And while there's some debate about whether Tesla's number beat consensus analyst estimates -- FactSet was showing a consensus of 89,000 at the time of Tesla's report, but other consensus estimates were below 80,000 -- there's little doubt that many investors expected a deliveries figure markedly worse than what Tesla shared.
It's worth noting that more than two-thirds of Tesla's quarter was done before lockdowns began to be implemented in the U.S. on a large scale. In addition, the recent shutdown of Tesla's Fremont, CA car-assembly plant likely had little impact on its Q1 deliveries: Manufacturing operations only ceased on March 23 and Tesla, which produced 102,672 cars in Q1, could lean on its inventory to handle deliveries for the remainder of the quarter.
Tesla's Q1 also got a lift from pent-up Chinese Model 3 demand, as its Shanghai plant (operational as of December, and open for all but two weeks in Q1) ramped production. And towards the end of the quarter, the company began delivering its Model Y crossover, for which it's believed to have racked up a healthy number of reservations.
But nonetheless, considering everything that happened in the U.S. and Europe in March, it's understandable that markets were pleased that Tesla reported more than 88,000 deliveries for Q1.
On the flip side, one can debate just how excited markets should get about a better-than-feared Q1 deliveries print, given Tesla's $90 billion-plus enterprise value as of Thursday's close and everything that's currently going on. Q2's deliveries print will almost certainly be a lot worse than Q1's, and it's fair to wonder at this point about what Q3 and Q4 will look like relative to expectations in, say, early February.
With the Bay Area's shelter-in-place orders having recently been extended to May 3, Fremont's assembly lines will likely remain shuttered for the rest of this month, and perhaps meaningfully longer. And with job losses soaring and consumer confidence nosediving, there's a good chance that many U.S. and European consumers who were thinking about buying a Tesla car are now thinking that they should hold off for the time being.
And perhaps most importantly, the economic destruction being wrought right now, together with the fact that COVID-19 fears could depress a lot of consumer activity even after lockdowns end, raises the possibility that we'll be seeing a gradual, rather than a sharp, economic recovery. Should macro conditions remain subpar for a while, that's bound to weigh on discretionary consumer spending for things like $35,000-plus electric cars.For that reason, Tesla's Friday bounce could be a sign that markets have priced in a lot of short-term financial damage related to COVID-19 and the lockdowns that have followed its spread, but haven't yet fully priced in longer-term damage for many stocks, in the event that there isn't a quick macro recovery.