Barclays cuts Tesla (TSLA) Q2 estimate to 251k from 315k on China challenges

To say that Tesla’s second quarter this year was tough would be an understatement. With Giga Shanghai closed for several weeks, the company’s overall vehicle production and delivery figures for the second quarter of 2022 would likely be affected.

It seems that Wall Street takes these factors into consideration. In a recent update, Barclays noted that Tesla’s second quarter electric vehicle deliveries would likely be lower than expected in the second quarter due to Covid-19 lockdowns in Shanghai.

As a result, Barclays chose to cut its estimate of Tesla’s second quarter figures from 315,000 vehicles to a more conservative 251,000, according to Barrons. That’s slightly lower than estimates from analysts polled by FactSet, who currently expect Tesla to post second-quarter deliveries of 289,000. Barclays also cut its estimate of earnings per share for Tesla to $2.08.

While the challenges posed by the intense Covid-19 lockdowns in China are evident across many automakers, Barclays analyst Brian Johnson noted that Tesla will be particularly feeling the adverse effects of the lockdowns. Indeed, Giga Shanghai generates higher margins than Tesla’s other factories, so any setbacks in the facility will likely hurt the company’s profitability, according to the analyst.

“As Tesla CEO Elon Musk grapples with outside business operations, the company’s second-quarter production and margins are set to disappoint as Shanghai hampers production. Indeed, we now expect Q/Q sales and production to contract (vs consensus expecting growth), with Shanghai’s ramp back to pre-lockdown levels taking longer. than expected and, to a lesser extent, Texas and Berlin experiencing slower than expected ramps. We are cutting our 2Q EPS to $2.08 from consensus $2.72 and $2.19, while our 2Q delivery estimate drops to 251,000 from 315,000 before and 303,000 consensus,” the analyst wrote.

It should be noted that Johnson is not a Tesla bull. He currently has an “underweight” rating on Tesla shares. He, however, raised his Tesla price target from $325.00 to $370.00 per share. Analysts tracked by FactSet are a bit more optimistic. Of the 37 reviews collected by FactSet, 22 have Tesla as the equivalent of a “buy”, 12 have the company as a “hold”, and only 3 are a “sell”.

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Barclays cuts Tesla (TSLA) Q2 estimate to 251k from 315k on China challenges

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Post expires at 1:10am on Wednesday June 22nd, 2022