- Tesla registrations, a key indicator for sales, fell dramatically in April and May in California, according to new data.
- The unexpected news did little to shake investor confidence in the high-flying stock.
- It’s the first look into how Tesla’s second quarter is faring after a surprise first-quarter profit.
- Visit Business Insider’s homepage for more stories.
Tesla sales dropped dramatically in California, its home state and a key market, this spring as the coronavirus forced people to stay home and caused record unemployment.
Registrations of new Tesla vehicles in the state fell 16% in April and another 70% in May compared to 2019, according to data from Dominion Enterprises as reported by The Wall Street Journal. It’s the first insight Wall Street has into how the company’s second quarter is faring after a surprise profit in the first three months of 2020.
Despite the temporary shutdown of its main car factory — and resulting legal tussle with local authorities — investors have largely shrugged off the expected sales drop and potential to wreak havoc on Tesla’s next earnings report. The stock hit a record high in June, crossing the $1,000 threshold for the first time even as chief executive Elon Musk admitted it was probably overvalued.
Read more: Leaked email from Elon Musk reveals the Model Y is experiencing production ‘challenges’ while passing the Model 3 as the top priority at Tesla’s US car factory
The confidence likely stems from China’s potential to make up for lost US sales.
“Right now the key to Tesla’s stock remains the staggering China growth rebound which is paramount to the company’s overall goals to hit one million delivery vehicles annually in a few years,” Dan Ives, an analysts at Wedbush Securities, said in a note to clients Wednesday as shares rose in trading.
“We continue to believe EV demand in China is starting to accelerate with Tesla competing with a number of domestic and international competitors for market share with Giga 3 remaining the linchpin of success which remains the prize that Musk and Tesla are laser focused on capturing.”
In May, Tesla’s sales in China surged, according to a trade group’s data, as the country rebounded from the coronavirus. However, new cases in Beijing that forced the closure of businesses and schools have economists and epidemiologists worried about another wave.
Tesla is set to hold a delayed “battery day” for investors and analysts in June, Musk said in May, though no specifics have been confirmed. While Tesla still leads electric vehicle sales by a large margin, several competitors — most namely Nikola — have gobbled up investor attention with plans for competing models, even without any deliveries.
Join the conversation about this story »
NOW WATCH: Pathologists debunk 13 coronavirus myths