Tesla's 'Brutal' China Disruptions Main Worry For Investors Ahead Of Q1 Earnings, Says Analyst

Zinger Key Points
  • Wedbush analyst Dan Ives estimates production hit of 50,000 EVs due to Giga Shanghai shutdowns
  • Ives expects Tesla to reports Q1 earnings of $1.86/share vs consensus of $2.26/share
  • Many variables around 2Q China output that will weigh on guidance for rest of the year - Ives

Tesla Inc TSLA investors would be focused on what the “brutal” three weeks of production halts in China mean for the rest of the year, according to Wedbush Securities, as the electric vehicle firm reports first-quarter earnings after the bell on Wednesday.

The Tesla Analyst: Wedbush analyst Daniel Ives has maintained an 'outperform' rating and a $1,400 price target on the Elon Musk-led company’s shares.

Ives has estimated Tesla will report earnings of $1.86 per share. The consensus EPS estimate is about $2.26, according to Benzinga Pro.

The analyst said Tesla’s robust demand story could be overshadowed by production issues in China.

Tesla delivered a record 310,048 electric vehicles in the first quarter of 2022.

See Also: How To Buy Tesla (TSLA) Stock

The Tesla Thesis: Ives estimates Tesla could take a production hit of 50,000 EVs in the current quarter due to three weeks of shutdowns in China.

“The main question for tomorrow is just how bad the China production issues are and what that means for deliveries in 2Q and the rest of the year,” Ives wrote in a research note.

“Musk & Co. are in a tough spot, as there are so many variables around 2Q China production that will certainly weigh on guidance for the rest of the year and thus there has been a clear overhang on the stock over the past month.”

Ives said demand for Tesla cars is outstripping supply currently by roughly 25% as many customers globally are ready to wait up to over six months for deliveries.

Why It Matters: Tesla’s Giga Shanghai factory is reportedly returning to production after being idled since the start of this month due to rising COVID-19 cases in China.

The plant, where the Model 3 sedan and Model Y SUV are made, contributed 52% of Tesla’s global deliveries last year. 

Price Action: Tesla stock closed 2.4% higher at $1,028.15 a share on Tuesday.

See Also: Here's How Much Tesla's Giga Shanghai Shutdown Will Impact The EV Maker


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Posted In: Analyst ColorNewsPrice TargetReiterationAnalyst RatingsCovid-19Daniel Iveselectric vehiclesElon MuskEVsGiga ShanghaiWedbush Securities
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