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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Tesla share price set to jump higher as car sales soar in South Korea

Elon Musk’s electric car company continues to trade higher after a strong second quarter that showed impressive sales figures, particularly in South Korea.

Tesla shares have soared in 2020 and investors can expect the electric car maker’s stock to continue on its upward trajectory after the company delivered a strong set of first quarter (Q1) results that showed a signifcant jump in sales in South Korea.

In fact, South Korea was a key market in helping the electric car maker exceed analysts’ expectations in Q2, with the country helping to make the Tesla Model 3 one of the best-selling vehicles on the market.

The popularity of the Model 3 in South Korea comes down to affordability, with the vehicle selling for $26,000 (₩31 million), helping Tesla shift more than 4000 in the East Asian nation during Q2.

Sales of the Model 3 were also supported by the South Korean government’s generous electric vehicle incentive scheme, which provides up to ₩26 million (circa $21,000) to citizens looking to go green.

Tesla closed at $1389 per share on Tuesday, representing yet another new all-time high for the stock, with company’s share price soaring more than 220% year-to-date.

Tesla records strong Q2 sales despite Covid-19 challenges

Looking more broadly, Tesla produced 82,272 vehicles in the Q2, with 90,650 deliveries. That included Model S/X production of 6,326 with deliveries of 10,600, and Model 3/Y production of 75,946 with 80,050 deliveries.

Deliveries came in well ahead of analyst expectations of a little over 70,000, with that feat made all the more impressive by the fact that Tesla’s Fremont factory was closed for a large portion of the quarter due to the coronavirus pandemic forcing the state of California to impose lockdown restrictions.

Tesla’s profitability remains a question mark

This latest rally is further proof of how Tesla’s stock price ‘defies underlying fundamentals and even future concerns that could dent growth and profitability’, including a resurgence of Covid-19 and geopolitical tensions, according to Monte Safieddine, market analyst at IG.

‘Whether one calls it a car company or a tech company; so far when it comes to Tesla’s share price, fresh record highs are being posted at a time when transportation is dented, and car companies are hurt,’ he added.

The speculative nature of the stock also means that ‘investors hunting for dividends won’t find Tesla an attractive option’.

‘But that also means price gains will be crucial in enticing investors into the volatile market, for any price increase that is clearly unjustified – if not, speculative - will scare away those looking for a healthy balance sheet and potential consistent returns, especially if liquidity woes return to the financial markets,’ Safieddine added.

How to trade stocks with IG

Looking to trade Tesla and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs and spread bets in a few easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘Tesla’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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