Tesla’s record-breaking delivery result

It's normal for Tesla TSLA +1.96% investors to trade wild. There is no doubt that 2023 has been more wild than usual, so for the electric vehicle leader, the upcoming first-quarter delivery number will have a greater significance than ever before.

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There are only a couple of trading days remaining in the first quarter of 2023, and Tesla shares (ticker: TSLA) were up about 54% as of Wednesday trading. Tesla stock is off to the best start to a year it has ever had. There was a second-place finish in 2014 when shares climbed by more than 41% between the beginning of the year and the end of March.

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Recently, Tesla stock was trading at $191.65, up 1.3% from the previous day's close. There was a 0.9% rise in the S&P 500SPX +1.07% and a 0.6% rise in the Nasdaq CompositeSPX +1.07%.

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Investors probably wouldn't have predicted that outcome if you had asked them what they thought would happen on Jan. 3. The shares of Tesla were in the worst condition they have ever been in as the market dropped 12.2% after deliveries for the fourth quarter missed expectations.

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Approximately 405,000 Tesla vehicles had been delivered so far. A total of 420,000 units were being sought by Wall Street.

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Tesla's stock price has plummeted 65% since the beginning of 2022, the worst year in its history when it lost 65% of its value. There was a drop of approximately 11% in shares in 2016 which came in second place.

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Because of the tumultuous start to 2023, the upcoming delivery result is going to be of great importance for investors going forward. It is typical for Tesla to report quarterly deliveries on the second day of the month following the quarter's end. 

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In this case, that would be Sunday, April 2, this time around. Based on Wall Street's expectations, the company is expected to sell about 420,000 units in the first quarter, which would be a record for the company, an increase of about 4% from the fourth quarter and a 35% increase from the previous year.

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Wedbush analyst Dan Ives wrote in a report published on Wednesday that "all eyes are on how Musk & Co. are holding up in this shaky macroeconomic environment.". He continued with, "Clearly since the Model Y/3 price cuts were implemented early this year, demand for the Model 3 has been robust during the first quarter."

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According to the company, as Tesla reduced pricing globally in January, which stimulated an increase in order volume. Ives thinks Tesla can produce more than the general consensus, or about 430,000 units.

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He rates shares of Tesla as a Bull. His share price objective is $220. Gordon Johnson, an analyst for GLJ Research, has long opposed Tesla. He assigned the stock a Sell rating and a $24.33 price objective.

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Moreover, Johnson believes that Tesla will be able to beat the consensus number of 420,000 deliveries by delivering 425,000 units. Despite this, he remains concerned that price cuts could be a sign of eroding demand, and this could lead to lower-than-expected profits in 2023 and beyond as a result of lower prices.

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The stock of Tesla is usually able to trade well after a beat, with shares outperforming the market about 70% of the time between the time right after the delivery results as well as right before reporting quarterly earnings.

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In 2023, however, this is not what happened. There was a delivery failure by the company, and the stock price went up about 34% between January 3 and just before the results were reported on January 25. There have been roughly a 4% increase in the S&P 500 over the same time period.

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Go figure. This makes it difficult to predict how the stock market will react to the first-quarter results. It is reasonable to expect that a number of about 425,000 should be sufficient to keep things stable for at least a few days.

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The founder of Fairlead Strategies, Katie Stockton, believes that Tesla shares should be able to hold $185 following Tesla's delivery results, otherwise they will fall as low as $160. To figure out how a stock will react to fundamental data points, Stockton looks at chart patterns in order to get an idea of how it will react to them. The stock of Tesla could trade as high as $215 in the short run if everything goes according to plan, she adds.