Despite the cutting-edge offering from Tesla Inc (NASDAQ:TSLA), Elon Musk’s US$740bln electric vehicle behemoth cannot shake off its overpriced reputation ahead of second-quarter results due on Wednesday July 20.
Equity analysts at Barclays expect disappointing margins and production rates for the NASDAQ-listed company due to bottlenecked Shanghai manufacturing outputs.
Earlier this month the EV manufacturer reported its first decline in deliveries in two years, with 254,695 vehicles delivered in the second quarter, down roughly 18% from the first.
Hence, Barclays has cut its forecast for earnings per share (EPS) from US$2.72 to US$2.08.
“We now expect sales and production to contract… with Shanghai’s ramp to pre-lockdown levels taking longer than expected and, to a lesser extent, Texas and Berlin experiencing slower-than-expected ramps,” said Barclays' Brian Johnson.
Tesla’s Berlin plant is also struggling due to “several issues including quality, supply chain, and lack of 2nd shift employees”.
As such, expected second-quarter Berlin output has been slashed from 17,000 units to 9,000 units.
Despite bearish cash burn expectations, free cash flow (FCF) targets remain positive, albeit adjusted down from US$1.4bln to US$1bln.
As such, TSLA bags an underweight price target of US$370.
Negative sentiment was not helped by Musk’s plans for a 10% reduction in the salaried workforce, which was seen as an acknowledgement of pending downside risk.
Tumultuous times but stable share price...for now
Tesla shares remain stable despite a tumultuous time for the company and founder Musk.
The South African-born billionaire's spat with social media platform Twitter has intensified, with the Securities Exchange Commission (SEC) weighing in on the US$44bln dispute.
Andrej Karpathy, Tesla’s head of AI, officially resigned on Wednesday July 13, a development which analysts at UBS say is “negative for sentiment”.
Tesla also faces fresh competition from South Korean carmaker Hyundai with the unveiling of its new Ioniq 6 sedan model due to begin production this year.
TSLA closed Thursday’s trade 0.54% up to US$714.94.