Tesla, Inc. TSLA shares are languishing at their lowest level since August 2021 and it may not be yet time to call the bottom, given the looming risks. A longtime Tesla bull on Thursday slashed his price target for the EV maker's shares, with concerns in China at the center of his tempered expectation.
The Tesla Analyst: Wedbush analyst Daniel Ives maintained his 'outperform' rating and reduced Tesla's price target to $1,000 from $1,400.
The Tesla Thesis: Strict Shanghai lockdowns have been an "epic disaster" thus far in the second quarter, Ives said in a note.
The analyst sees modest delivery softness in the current quarter and a slower growth trajectory for Tesla in China in the second half.
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The zero COVID-19 shutdowns at Giga Shanghai negatively impacted output in April, the analyst said, adding that restarting has been very choppy so far in May.
"We are seeing a myriad of issues across the whole supply chain based on our work in China including the logistics angle once Model 3's/Y's are ready for shipments and deliveries," Ives said.
The ramp of Austin and Berlin, Ives said, appears to be proceeding well and will be key growth drivers over the coming years.
"We remain firmly bullish on Tesla over the long term and our thesis has not changed, however, we have to reflect a new reality for Tesla in China with headwinds abound in a shakier macro backdrop," Ives said.
Elon Musk's deal to buy Twitter, Inc. TWTR does not impact Tesla's fundamental story, the analyst said, but said the distraction risks are hard to ignore.
Wedbush lowered its second-quarter and fiscal years 2022 and 2023 estimates for Tesla, citing softness in China and the ongoing supply issues. The delivery estimate for 2022 has been cut from 1.56 million units to 1.43 million units.
Tesla Price Action: Tesla closed Thursday's session little changed at $709.42, according to Benzinga Pro data.
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