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Tesla’s Delivery Figures Turn Heads on Wall Street, But Unmoved Inventory Raises Questions

Investors can’t seem to get enough of Tesla’s record-breaking second-quarter delivery figures, driving the company’s stock up by over 7% on Monday. While the numbers have easily surpassed predictions, a closer look reveals an intriguing detail: Tesla has been producing more cars than it has been delivering—for the fifth quarter in a row.

In the last three months, the electric-vehicle trailblazer churned out a staggering 497,700 vehicles, compared to its 466,000 deliveries. Despite these numbers exceeding estimates by over 20,000, Tesla’s swelling inventories suggest that Elon Musk still faces challenges in stoking further demand—a task set to become even more daunting as the auto market competition intensifies.

Although Tesla is currently leading the race against emerging EV makers, it still has to contend with the robust and consistent demand for traditional gas-powered vehicles. According to data from JD Power, the average price of a gas car remained steady year-on-year in June, despite a wider availability of most vehicle models.

The recent delivery figures might suggest that Tesla’s aggressive price cuts are effectively fueling demand. However, it seems there’s still room for improvement. Additional price reductions could be on the horizon to address the ongoing inventory surplus.

But for the moment, investors are happily surfing this wave of positive news. Tesla’s stock has surged by more than 125% over the last six months, and many see the 10% quarterly leap in deliveries as a harbinger of further gains.

Wedbush’s Dan Ives praised the performance in a tweet: “The price cuts were a savvy move for Tesla and are paying major dividends, particularly in the China market. This was a trophy case quarter for Musk & Co.”

On the flip side, Goldman Sachs hinted Monday that Tesla might have to slash prices again to boost demand and mitigate any potential downside to margins. This could lead to a stock fall if the price cuts outpace Wall Street’s expectations.

Goldman Sachs also identified other potential risks to Tesla’s stock price, including increasing competition, product delays, and operational risks associated with Tesla’s high level of vertical integration.

Despite these concerns, Ives still holds firm to a $300 price target for Tesla stock—an increase of roughly 8% from Monday’s closing price of $276—as markets wrapped up early ahead of the July 4 holiday.