Longtime Tesla bull Dan Ives sees a little less power behind the electric vehicle maker’s stock.
The managing director of Wedbush Securities cut his price target on Tesla to $1,000 from $1,400 in a new note released Thursday while maintaining an outperform rating.
“The success of the China story, both on the supply and demand side, is the keystone of our long-term bullish thesis on Tesla,” Ives wrote. “Having said that, the reality is that the current Shanghai lockdowns have been an epic disaster so far in the June quarter and we expect Tesla to experience mild delivery weakness this quarter with a more growth trajectory. slow in the key region of China in the second half.”
Tesla stock, the second most active ticker on the Yahoo Finance platform, rose slightly at midday Thursday.
Ives’ more low-key stance on Tesla makes sense given the importance of the Chinese market to the company and recent sales trends in the region.
Tesla sold just 1,512 cars in China in April, a 98% drop from March, according to new data from the China Passenger Car Association. The declines reflect the heavy impact of the country’s zero-tolerance COVID-19 lockdown, which has hurt everything from making cars to Tesla to getting enough chips to ship products to Cisco.
The data also showed Tesla’s production in China fell 81% to 10,757 in April. Tesla did not export any automobiles from Shanghai during the month. In March, he exported 60.
“We expect weak sales in China this quarter with spillover into Q3,” Ives wrote. “While Tesla should be able to aggressively enter the latter half of the China region on the production front, with the zero Covid policy looming, there will likely also be bumps in the road during the next few months.”
The veteran analyst also flagged CEO Elon Musk’s ongoing battle to buy Twitter as a distraction that could continue to weigh on the stock. Tesla shares have fallen 33% since Musk revealed his stake on the social media platform in early April.
“While the Twitter situation in theory doesn’t impact Tesla’s fundamental story,” Ives noted, “the risks of distraction for Musk (perception is reality) are hard to ignore at some point. where the Tesla ecosystem has never needed Musk more with the worst supply chain crisis seen in modern history.”
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