https://www.barrons.com/articles/tesla-stock-china-51656595939
It’s been quite a quarter for TeslaTSLA –0.72% . China’s zero-Covid-19 problems have reduced production and created a whole new series of supply chain problems, in addition to the semiconductor shortage that has plagued the entire auto industry for more than a year.
Investors will get a sense of just how difficult the quarter was for the electric-vehicle maker in the early days of July, when Tesla (ticker: TSLA) reports second-quarter deliveries. Wedbush analyst Dan Ives believes the “line in the sand” for Tesla’s second-quarter deliveries is 250,000. Better than that will be a positive. Anything below will be a disappointment.
Beyond the headline number, Ives, in a Thursday report, urged investors to look at the trajectory of Chinese deliveries in June. How things are going for Tesla as China eases restrictions might be the most important data point from the quarterly release.
Tesla isn’t expected to report Chinese deliveries when it reports its overall numbers. Still, investors can get a sense of what happened.
Before the lockdown, Tesla was delivering roughly 180,000 vehicles from its Shanghai plant each quarter. In April, Tesla delivered about 310,000 units in the first quarter with roughly 130,000 came from Tesla’s Fremont, Calif., plant.
Fremont production should approximate 130,000 units again. Tesla is also making cars in Texas and Germany, but both of those plants just started up. Based on how Tesla’s Shanghai facility ramped up, investors can expect roughly 30,000 units, combined, from the new plants in the second quarter. That leaves about 90,000 units for Shanghai.
Tesla delivered just 1,512 vehicles from the Shanghai plant in April, according to the China Passenger Car Association. Deliveries for May came in at about 32,000 units. That leaves roughly 56,000 deliveries for June to hit Ives’ 250,000 line.
That number for June also implies that Shanghai operated at about 80% to 85% of its capacity in June.
That’s a lot of numbers, but this quarter isn’t be easy to call for investors. It’s a complex time for the company, and the industry.
Ives, for his part, rates Tesla stock at Buy with a $1,000 price target.
Overall, just over 50% of analysts covering the company rate shares at Buy. The average Buy-rating ratio for stocks in the S&P 500SPX –0.47% is about 58%. The average analyst price target for Tesla stock is about $900 a share.
Tesla stock is down about 2.3% in Thursday morning trading. The overall market is down. with the S&P 500 and Nasdaq Composite are off 1.5% and 1.7%, respectively.
Coming into Thursday trading, Tesla stock is down about 36% in the second quarter, and off about 35% for the year.