Tesla, Inc's TSLA stock received a string of price target cuts from sell-side analysts, who blamed their tempered expectations on the slow ramp-up of production at the Giga Shanghai plant. There now appears to be a break in the negative sentiment engulfing the stock.
What Happened: Tesla stock could rocket higher in 2022 as the bear-case scenario fades, Mizuho Securities analyst Vijay Rakesh said in a note on Tuesday, according to Tesmanian.
Rakesh was commenting after Tesla hosted him at the Fremont, California factory.
The analyst said Tesla faces near-term headwinds as Giga Shanghai, which makes up about 40-50% of its total capacity, has yet to produce at pre-lockdown rates. This, however, sets Tesla up for a strong second-half rebound, he added.
April deliveries may have been at 40,000 units, down 22% from January's 51,000 units, Rakesh noted. This, according to the analyst, could lead to a sequential revenue decline in the June quarter.
"That said, we believe a potentially stronger SepQ/DecQ rebound is possible with improved supply chains and Berlin ramping," Rakesh said.
Why It's Important: Tesla's Giga Shanghai has begun running two shifts since last week, and it is rumored that production at the plant may have returned to 70% of pre-COVID levels.
The opening of two new Gigas in Texas and Berlin may take some pressure off the production-constrained Shanghai plant. Giga Shanghai, however, is important, not only from the perspective of output, but also for margins.
Rakesh reaffirmed his Buy rating and $1,300 price target for Tesla stock.
Tesla shares were up 1.06% on Wednesday morning at $766.28, according to Benzinga Pro.
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