Tesla’s record deliveries beat Wall Street estimates. The stock will not go up.

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delivered 466,140 vehicles in the second quarter. This is a record and better than what Wall Street expected. It’s a very good result and investors like a strong “beat”, but it might not be enough to keep the stock up, given the starting point.

The more than 466,000 units compares to around 423,000 delivered in the first quarter of 2023 and around 255,000 in the second quarter of 2022, when much of China was locked down to fight Covid-19.

Wall Street was looking for deliveries of around 445,000 to 447,000 cars. The consensus call compiled by the company is around 447,000 units, close to the number compiled by Bloomberg. The consensus estimate on

set of facts

was about 445,000 units.

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(symbol: TSLA) produced 479,700 units. The gap between production and deliveries is 13,560. That’s a small negative point.

A small gap between production and deliveries when sales rise is no surprise, but investors have been watching the number, wondering if rising vehicle inventories mean demand is falling.

Tesla has produced about 99,000 more cars than it has sold in recent years. The current level represents approximately 19 days of inventory. This is little. The traditional auto industry typically operates between 30 and 60 days of sale on dealer lots.

Even if the number of Tesla does not compare to the whole industry, it makes sense to pay attention to the change in the number of Tesla.

Given all the information provided in the second quarter report, it’s still not easy to say what will happen to Tesla stock on Monday. Barrons guessing is flat. (Barrons picked Tesla stock on Jan. 6, thinking it would be a good year for Tesla.)

The numbers are good, but the starting points matter. As of Monday, Tesla stock is up 22% over the past month and 113% so far this year. THE

S&P500
And

Nasdaq Compound
are up around 16% and 32% this year, respectively.

This is the third best start to the year in Tesla stock history. Shares gained around 158% in the first half of 2020 and around 217% in the first half of 2013. Tesla stock was one of 13 stocks in the

Russell 1000
double or even better in the first half. This type of performance means investors want great news when things like deliveries or earnings happen.

Delivering almost 20,000 units more than Street’s estimate is great news, but is it good news?

Either way, reaction to a delivery report gives investors insight, but it doesn’t always, if ever, define the stock’s long-term direction. Deliveries went well. Tesla stock, remember, fell 6% after posting record first-quarter deliveries on April 2. Shares closed at $194.77 on April 3, the trading day after deliveries were released. They closed the first half at $261.77.

When delivery numbers beat the street, Tesla shares typically rise between the delivery report and earnings about two-thirds of the time. It is not difficult to understand why. Better deliveries mean higher profit estimates.

Tesla’s second-quarter earnings report is scheduled for July 19. Wall Street is forecasting earnings per share of about 77 cents, down from 85 cents in the first quarter. That seems low now, given the deliveries. EPS is important, but the most watched number coming in the second quarter financial results could be operating profit margins.

Tesla cut prices significantly in early 2023 to stimulate demand amid rising interest rates and a slowing economy. Lower prices kept demand high, but at the expense of profit margins.

Operating profit margins fell to about 11% in the first quarter from 19% a year earlier. For the second quarter, analysts expect flat operating profit margins of around 11%, compared to around 15% in the second quarter of 2022.

For the full year, Wall Street expects Tesla to ship about 1.8 million units. If Tesla just repeats the second quarter figure in the third and fourth quarters, it will end up shipping around 1.82 million units. In the past 12 months, Tesla has delivered 1.64 million vehicles.

Write to Al Root at allen.root@dowjones.com