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Tesla Has Some Great 4th Of July News

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There will be more than one reason for the fireworks over Fremont.

It may be surprising to realize that Tesla's starry-eyed shareholders and cynical short sellers both see the company in the same light. Each party seems to think that demand for Teslas would make the company an inherent success story as long as it could get the cash it needs to get off the ground and fix its production problems. The only difference is that the shareholders think Tesla will overcome these issues while the short-sellers don't.

But the notion of Tesla as a weighed-down arrow with an inherent trajectory to success came into question after a rough first quarter in 2019. By the time March had ended, Tesla sales had fallen by 31%, casting serious doubt over whether demand for the company's golden eggs, its trio of electric cars, was still strong enough to float the automaker to the top once it rid itself of anchors.

But with June over and Tesla's second-quarter sales numbers now in, we can see that the American EV manufacturer has regained the momentum it needs to continue disrupting the auto industry. According to Reuters, Tesla is heading into the 4th of July weekend having broken its own record by delivering 95,200 vehicles in the second quarter of 2019, surpassing the 90,700 cars it delivered in Q4 2018 when it turned its first profit of $139.5 million.

Tesla has yet to release its Q2 2019 financial report, so we don't know if the automaker managed to come out of this quarter with a profit, but we do know it badly needs the cash after it lost $710 million in Q1 2019. "We are increasingly comfortable that they should reflect an even better in the third quarter, and probably their first hundred thousand in a quarter," Roth Capital analyst Craig Irwin said.

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Despite the good news, industry experts are still warning investors that Tesla is a risky investment due to its volatility. "These are undeniably strong numbers, but given Tesla's recent history of significant swings in performance from quarter-to-quarter we remain cautious for now," Hargreaves Lansdown analyst Nicholas Hyett said.

Much of the reason seems to stem from the fact Tesla is still pushing a boulder up a mountain, metaphorically speaking. That boulder is made up of an ever-shrinking US government tax credit, the fact the company is launching Chinese production facilities while the country is in the middle of a trade spat with the US, and Tesla's need to further refine its production processes at a time when its bleeding high-ranking executives.