Tesla To Celebrate Record Quarter Amid High Fuel Prices

Tesla is expected to announce another record quarter despite industrywide supply-chain woes as the world’s top maker of electric vehicles benefits from high gas prices pushing more buyers toward plug-in models.

The company likely delivered 309,158 vehicles globally during the first three months of the year, according to a dozen analysts surveyed by Bloomberg. Tesla handed over about 308,000 vehicles in the fourth quarter, which was its best performance to that point.

Tesla was not supposed to outperform in a down market. Tesla is supposed to be a riskier, more volatile stock that the others, so it should get hurt worse in market downdrafts.

Tesla’s equity beta, a measure used to assess the riskiness of a stock, is roughly two. That essentially means the stock is twice as volatile as the overall market, making it riskier by definition.

The beta for the other trillion-dollar stocks is about one. That means, roughly speaking, if the S&P 500 goes up 1%, investors should expect Amazon, Alphabet , Microsoft , and Apple stock to go up by roughly the same percentage.

In the first quarter, the riskier stock won. Tesla might have beaten its trillion-dollar peers because the news it delivered was more surprising. Back in early January, Tesla reported delivering about 309,000 vehicles in the fourth quarter. That was far better than the roughly 275,000 Wall Street had projected.

Still, the ride for investors was a rough one. Tesla shares hit an intra-quarter low of $700 on Feb. 24, putting it down about 34% for the year to date, only to rally more than 50% from there into the end of March.

The intra-quarter losses in the other four stocks averaged about 17%. None was worse than Tesla’s, indicating that beta worked as an indicator of intra-quarter volatility.

A higher beta means, theoretically speaking, that investors should demand more return for Tesla stock than other large stocks. Investors should get more return for taking more risk.

Of course, it doesn’t always turn out that way in practice. Academic papers have long demonstrated a “beta anomaly“ the fact that for a long time, low-beta stocks have outperformed high-beta stocks. That just isn’t what’s supposed to happen, so academics have tried to find tools other than simple beta to measure individual stocks’ riskiness.

Tesla and its four trillion-dollar counterparts represent about 25% of the entire market capitalization of the S&P 500. They accounted for about 17% of the $2 trillion in market capitalization the index lost in the first quarter.

Investors probably are not surprised that Berkshire Hathaway (ticker: BRK/B) stock was up. It is a value stock, a category that outperformed growth shares in the quarter. That is what makes the strength of Tesla (TSLA), a growth stock, a big surprise.

Equally unexpected, considering traditional investing tenets, is that the shares outperformed all the other trillion-dollar stocks in the S&P 500. Tesla stock ended the quarter with a gain of about 2%. It isn’t much, but investors are unlikely to have been upset considering the comparable numbers.

The Russell 1000 Growth Index, and the Nasdaq Composite Index, both dropped about 9% in the quarter. The S&P 500 dropped 5%.

The Russell 1000 Value Index did better than most, dropping only 1% in the quarter. Berkshire stock, which isn’t in the trillion-dollar club, with a market capitalization of a bit less than $800 billion, gained about 18% in the quarter.

None of the other trillion-dollar companies posted first-quarter gains. Alphabet (GOOGL) and Amazon.com (AMZN) dropped about 4% and 2%, respectively. Microsoft (MSFT) fell about 8%. Apple (AAPL) dropped 2%.