Tesla Stock just can’t come out of its crisis. Here’s why.


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Tesla stock fell on Thursday.

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stock is trying to break out of its post-profit funk, but it’s struggling. A positive production report lifted shares in the trade ahead of release Thursday, but the stock fell back into negative territory.

Electrek reported Thursday that Tesla’s production is “sold out” for the second quarter. Tesla CEO Elon Musk said on the company’s first quarter conference call last month that demand was the best he had seen.

This means Tesla is expected to produce more than the 180,000 vehicles it produced in the first quarter. This is good news, but growth is expected. Tesla is expected to produce around 800,000 vehicles in 2021.

Any positive comments on Q2 production are worth noting due to the global semiconductor shortage plaguing the industry as a whole. Many global automakers are taking time out in the second quarter due to the shortage.

Ford engine

(F), for example, estimates that it will lose 50% of its production planned for the second quarter.

Tesla stock (ticker: TSLA) has fallen about 9% since the company reported better-than-expected first quarter profits in late April.

Thursday’s report should be a welcome boost for the action, and it was initially, with stocks up more than 1% in trade before market. While the stock still has time to turn around on Thursday, it was down around 0.8% to $ 665.70 in recent trading. the

S&P 500


Dow Jones Industrial Average

also fell, albeit more modestly, while the Nasdaq Composite Index fell 0.8%.

A bunch of things have worked together to keep Tesla’s stock down since the electric vehicle pioneer announced profits. The quality of income is one of them. Analysts questioned the quality of the first quarter results as higher-than-expected zero-emission vehicle credit sales and a gain on Bitcoin trading contributed to profitability. But Tesla’s critics want more of its revenue to come from cars.

Tesla can sell zero-emission credits because it makes more than its fair share of zero-emission cars. It sells them to automakers who do not make their quota of emission-free vehicles.

Stellantis (STLA) – the combination of

Fiat Chrysler

and Peugeot – announced this week that it plans to stop buying European emission credits from Tesla in 2021. It also rattled Tesla shares. Tesla shares are down about 2% since news started circulating earlier this week, but the

Nasdaq Composite

is also down around 2% over the same period.

Navellier & Associates chief investment officer Louis Navellier called the loss “devastating” in an email Wednesday. Devastating is probably an exaggeration. Tesla will likely still generate billions in credit sales in 2021. Additionally, Wall Street analysts have historically modeled credit sales as a declining source of future income. Tesla did not respond to a Barron’s request for comments Wednesday on the news of Stellantis.

Navellier is not a Tesla analyst at a brokerage firm, so he does not have a rating or price target for Tesla shares.

Write to Al Root at [email protected]

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