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Tesla Hits Record Q2 Deliveries: ETFs Set to Soar

Sweta Killa

Tesla Motors TSLA impressed investors by reporting better-than-expected deliveries for the second quarter. The company manufactured record 87,048 vehicles (72,53 Model 3 and 14,517 Model S and Model X combined) in the period and delivered a record 95,200 (77,550 Model 3 and 17,650 Model S and X) vehicles, up 52% from the first quarter.

Strong numbers came on the back of Model 3's availability in the United Kingdom and continued interest from mainland Europe and China. The company has allayed fears over vehicle demand and its cash flow. Additionally, orders placed were more than the deliveries, causing a spurt in the order backlog before heading into the third quarter (read: Tesla Steers Solid Growth Prospects: ETFs to Buy).

The robust deliveries and strong demand bode well for the electric car maker to achieve its full-year commitments. Tesla is expected to deliver 360,000-400,000 vehicles in 2019, indicating growth of 45-65% from 2018. It hopes to produce 500,000 vehicles a year globally in the 12-month period ending Jun 30, 2020. The company continues to target a 25% non-GAAP gross margin on Model S, Model X and Model 3 vehicles.

Following the data release, shares of TSLA rose as much as 9.1% in after-hours trading. Tesla currently has a Zacks Rank #3 (Hold) and a VGM Score of D. It belongs to the top-ranked Zacks Industry (in the top 41%).

ETFs to Watch

The solid trading will also spread to the ETF world, especially having substantial allocation to this luxury carmaker. We have highlighted five funds for investors, who are looking to bet on the renewed Tesla growth story.

ARK Industrial Innovation ETF ARKQ

This is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services as well as technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials and transportation. This approach results in a basket of 34 stocks with TSLA occupying the second spot with 10.6% share. The product has accumulated $172.4 million in its asset base and charges 75 basis points (bps) in fees per year. It sees a lower volume of about 25,000 shares a day (read: Best & Worst Zones of 1H19 and Their ETFs).

ARK Innovation ETF ARKK

Like ARKQ, this is also an actively managed fund and follows the same strategy but it provides exposure to genomic companies, industrial innovation companies or Web x.0 companies. In total, the fund holds 38 securities in its basket with Tesla occupying the top position, accounting for 10.5% share. The product has gathered $1.7 billion in its asset base and trades in a good volume of about 354,000 shares. Expense ratio comes in at 0.75%.

ARK Web x.0 ETF ARKW

This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 37 stocks in its basket with Tesla occupying the top position at 9.3%. The ETF has amassed $446.1 million in its asset base and trades in a good average daily volume of around 114,000 shares. Expense ratio comes in at 0.75%.

VanEck Vectors Global Alternative Energy ETF GEX

This ETF tracks the Ardour Global Index Extra Liquid, focusing on global companies that are primarily engaged in the business of alternative energy. The fund holds about 30 stocks in its basket with AUM of $91.5 million while charging 63 bps in fees per year. Average daily volume is paltry at about 4,000 shares. Tesla occupies the fifth position in the basket with 6.3% allocation. In terms of country exposure, the fund is skewed toward the United States with 64% share while Denmark and China round off the top three spots (see: all the Alternative Energy ETFs here).

First Trust NASDAQ Clean Edge Green Energy Index Fund QCLN

This fund tracks the Nasdaq Clean Edge Green Energy Index and manages assets worth $107.1 million. It charges 60 bps in fees per year while trading in a light volume of around 13,000 shares per day. In total, the product holds 41 U.S. securities with Tesla Motors taking the fifth spot at 5.6%. It has a Zacks ETF Rank #4 (Sell) with a High risk outlook.

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