Tesla's Big Deliveries Beat Is Irrelevant

Tesla (NASDAQ: TSLA) stock has rocketed higher again in recent days, after the company easily beat analysts' estimates for its second-quarter production and vehicle deliveries. While the COVID-19 pandemic did take a toll on the electric vehicle maker, it wasn't quite as bad as some had feared.

That said, the deliveries beat was not as meaningful an event as many investors seem to believe. Last quarter, supply was the main constraint on Tesla's results. By contrast, in the long run, demand -- and, to a lesser extent, costs -- will be the primary determinants of Tesla's success.

In late March, Tesla was forced to temporarily close its main factory in Fremont, California in response to the growing COVID-19 pandemic. The factory didn't start to reopen until May 11, in defiance of local authorities. While Tesla's new Gigafactory in Shanghai was busy building Model 3s for the Chinese market throughout the quarter, having reopened in February after a brief shutdown, the Fremont plant's temporary closure severely limited output last quarter.

Source Fool.com