Investor's Corner

Wedbush drops Tesla price target amid “epic disaster” lockdowns in Shanghai

(Credit: Tesla Greater China)

Wedbush analyst Dan Ives opted to lower his price target for American electric vehicle maker Tesla from his previous $1,400 per share to a still-optimistic but more conservative $1,000 per share. Ives cited headwinds in China as a driver for his updated estimates.

The analyst noted that the current lockdowns in Shanghai are an “epic disaster” for the second quarter. And considering that China is still in the middle of battling the pandemic, Ives noted that Tesla would likely record “modest delivery softness this quarter with slower growth trajectory in the key China region into the 2H.”

The Wedbush analyst pointed to a “myriad of issues across the whole supply chain based on our work in China, including the logistics angle once Model 3’s/Y’s are ready for shipments and deliveries.” But this is not all. Ives also stated in a note to clients that Tesla China’s output issues may spill over into the third quarter.

“While Tesla should be able to ramp aggressively into 2H within the China region on the production front, with the zero Covid policy looming, there will likely be some bumps in the road over the coming months as well. The ramp of Austin and Berlin appear to be proceeding well and will be key growth drivers over the coming years as Tesla further ramps its production capability globally,” Ives wrote.

While Ives was notably cautious in his note, Tesla CEO Elon Musk has remained quite optimistic about Giga Shanghai’s chances this second quarter. While addressing inquiries during the Q1 2022 earnings call, Musk appeared confident that Tesla China’s numbers in the third and fourth quarters would be notably more impressive.

“I think notwithstanding new issues that arise, I think we will see record output per week from Giga Shanghai this quarter, albeit we are missing a couple of weeks. So, that means the most likely vehicle production in Q2 will be similar to Q1, maybe slightly lower, but it’s also possible we may pull a rabbit out of the hat and be slightly higher. But it’s really, call it, roughly on par. But then, Q3 and Q4 will be substantially higher,” Musk said.

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Wedbush drops Tesla price target amid “epic disaster” lockdowns in Shanghai
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