Why Tesla Shares Tanked Early Tuesday
Tesla (NASDAQ: TSLA) gave investors more insight into its second quarter over the holiday weekend, and shares are dropping today as a result. The stock dropped as much as 5% in early trading. Shares have since recovered some, but remained down 1.1% as of noon ET.
Heading into the second quarter, analysts were optimistic that Tesla would continue to grow its rate of vehicle deliveries. But supply chain struggles are affecting automakers globally, and Tesla has been no exception. That has affected the pace of production growth at its two new factories. But pandemic-related production delays at its Shanghai facility had the most impact on the second quarter. It resulted in a shortfall of deliveries compared with already reduced analyst expectations.
Tesla delivered just 254,695 vehicles in the second quarter, down from more than 310,000 in the prior quarter. Analysts had been lowering estimates for second-quarter deliveries, but still expected about 264,000 vehicles, according to FactSet Research. The shortfall has some analysts concerned about Tesla's recent valuation in relation to upcoming financial results. Analysts from J.P. Morgan cut the firm's price target to $385 today, representing about a 40% drop from recent levels, reports CNBC.
Source Fool.com
