This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
What happened
After a brief respite on Monday, shares of electric vehicle (EV) leader Tesla (NASDAQ: TSLA) turned back south again on Tuesday. As of 11:50 a.m. ET today, the stock was down 4.5%.
So what
Tesla has announced plans to resume full-capacity production of EVs at its Shanghai Gigafactory as early as today. If it succeeds in getting production back up to full speed, it could be churning out nearly 950,000 vehicles per year in China, putting it back on track toward its goal of producing 1.5 million EVs per year. But probably not this year.
As Daiwa warns today in a note covered by The Fly, Tesla has already lost about 100,000 units of potential production in Shanghai as it sat on the kerb and waited for Chinese COVID containment regulations to lapse. Adding to Tesla’s troubles, Daiwa believes production ramp-ups at Gigafactories in Texas and in Germany have been slower than planned, reducing total 2022 potential production by another 80,000 vehicles.
Result: In a year when Tesla aimed to produce 1.5 million EVs, it might succeed in building only 1.2 million.
Now what
And that’s OK. On the one hand, Daiwa cites this expected production miss as the reason it’s cutting its price target on Tesla by more than 30%, to $800 a share. Yes, this lower value on shares could complicate Elon Musk’s plan to finance his acquisition of Twitter (as analysts at Bernstein commented today). And yes, rival Volkswagen could very well try to take advantage of Tesla’s weakness at this point to accelerate its own EV plans and overtake it in sales by 2025.
But it’s pretty irrelevant whether Tesla achieves 1.5 million EVs produced this year. In the grand scheme of things, that’s a short term and rather arbitrary milestone. What’s important is whether the company succeeds in producing at the rate of 1.5 million cars per year after the lockdown ends. And not only does Daiwa think it will, but that analyst estimates the company will keep growing its production, probably hitting 1.8 million cars in 2023.
That’s the goal you should focus on: what happens after the lockdown goes away and Tesla’s growth is able to rev higher unhindered. As long as it keeps doing that, this growth story remains intact.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
The post Why Tesla stock turned south today appeared first on The Motley Fool Australia.
Should you invest $1,000 in Tesla Motors right now?
Before you consider Tesla Motors, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Tesla Motors wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of January 13th 2022
More reading
- Why Tesla stock finally bounced today
- Nasdaq sell-off: 2 growth stocks billionaires were buying in Q1
- Down almost 30% in the past month, here are 2 reasons to buy Tesla shares and 1 reason to hold off
- Why Tesla stock fell again today
- Why Tesla stock got dented today
Rich Smith has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla and Twitter. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
from The Motley Fool Australia https://ift.tt/YO0vuN5
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