According to MarketWatch, Wedbush Securities Managing Director Daniel Ives has slashed his price target on Tesla by 29%, from $1,400 USD per share to $1,000 USD.
Historically a Tesla bull, Ives said in a note to Wedbush clients that it is “hard to ignore” Tesla’s woes in China, where strict lockdowns following a COVID-19 outbreak have soured both the local demand for the company’s cars and production at its Shanghai Gigafactory.
Giga Shanghai’s assembly lines remained silent for 24 days over the course of two lockdowns imposed by the local government. At a peak run rate of 2,600 cars per day, the closure cost Tesla well over 50,000 vehicles. Furthermore, component shortages have prevented the facility from resuming production at full capacity since it reopened.
“The success of the China story on both the supply and demand side are the linchpins to our long term bull thesis in Tesla,” Ives wrote in his note.
“That said, the reality is the current Shanghai lockdowns have been an epic disaster so far in the June quarter and we expect Tesla to see modest delivery softness this quarter with a slower growth trajectory in the key China region into the [second half of the year].”
The Wedbush analyst added that the ongoing drama with Tesla CEO Elon Musk’s $44 billion USD acquisition of social media company Twitter has also shaken the investment firm’s confidence in the company’s stock.
The “circus show,” as he called the still developing situation, has been a “black eye” for Tesla, said Ives.
Last week, Musk said the Twitter deal was “temporarily on hold” as he sought to independently verify the percentage of spam/fake/bot accounts that make up Twitter’s monetizable daily active users. The celebrity billionaire affirmed that he was “still committed” to acquiring the company, though.
However, Musk said on Tuesday that the deal “cannot move forward” until Twitter CEO Parag Agrawal provides evidence supporting the company’s spam/fake account estimates.
“While the Twitter situation in theory does not impact the Tesla fundamental story, the distraction risks for Musk (perception is reality) are hard to ignore at a time that the Tesla ecosystem have never needed Musk more with the worst supply chain crisis seen in modern history.”
Ives still maintained his outperform rating on the electric vehicle (EV) maker’s stock, though.
Tesla’s stock dove 1.6% toward a nine-month low in premarket trading on Thursday. The company’s stock price is down 41.15% year-to-date, but a portion of that can be attributed to a global downturn in economic markets.
As of writing, Tesla stock is trading at $710.28 per share, up 0.07% for the day.
