🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Tesla's 'Very Tough' Q2 Could Result in Strong Q3 Recovery - Morgan Stanley

Published 2022-06-14, 08:04 a/m
© Reuters.
MS
-
TSLA
-

By Senad Karaahmetovic

Tesla's (NASDAQ:TSLA) CEO Elon Musk has rallied troops once again after telling staff the electric vehicle (EV) maker is having a “very tough quarter.”

A report, over the weekend, noted that Musk told employees that Tesla is having a “very tough quarter,” hence workers need to “rally hard to recover.”

“This has been a very tough quarter, primarily due to supply chain and production challenges in China, so we need to rally hard to recover!” Musk wrote to staff, according to Electrek.

Morgan Stanley analyst Adam Jonas has reflected on Musk’s comments to note that disruptions felt by Tesla are “understandable” given supply chain bottlenecks and Shanghai lockdowns. The analyst reminds investors that Shanghai generates >40% of global production for Tesla and over 50% of EV maker’s profit.

“As Tesla has shown throughout its history, it can make up substantial lost ground with accelerated deliveries into the close of a quarter where disproportionate amounts of a full quarter’s production can occur in the final week or two,” he told clients in a note.

Still, Jonas says Tesla is likely to stage a strong recovery in Q3 after a difficult second quarter.

“Consensus forecasts of <$18bn total company revenues appears to discount a sequential QoQ decline in delivery volume (to below 300k units for 2Q). Any lingering impact of the Shanghai lockdown on Tesla production probably resolves itself before year end.”

The analyst would also “allow for near-term margin pressure” as both Texas and Berlin are in the process of ramping up while the battery costs continue to surge.

Tesla shares are up 0.5% in pre-market after falling over 7% yesterday.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.