Tesla stocks slumped another 6% on Tuesday, wiping $30 billion off the US electric vehicle maker’s market capitalisation, and taking its share price losses to 44.6% since April 4, when Elon Musk announced he had acquired a stake in Twitter.
The company’s market cap has fallen to $660 billion from a peak of more than $1.2 trillion despite upbeat forecasts.
The latest drop came as an analyst lowered his price target for Tesla stocks to $800 from $1,150 over the impact of Covid-19 lockdowns in Shanghai and supply chain issues.
Jairam Nathan of Daiwa Capital Markets in New York said the effects on its so-called Gigafactories in Shanghai, Austin and Berlin would will cut deeper into earnings than previously expected.
“We are cutting our [2022 and 2023 earnings per share] estimates to reflect the lockdowns in Shanghai and supply chain concerns impacting ramp-up of Austin and Berlin plants,” Nathan said in a note.
He said 2022 deliveries would total 1.2 million units, compared with 1.4 million previously expected, assuming just over 100,000 units lost in Shanghai and another 80,000 units combined in Austin and Berlin due to a slower ramping up of production in the US and Germany.
‘Accelerating EV Penetration’
But Nathan stood by Daiwa’s recent stock upgrade, citing “accelerating EV penetration in Europe and China”.
The share price reduction, however, was also prompted by “any negative impact from Elon Musk’s proposed takeover of Twitter, either on management of Tesla or on Tesla stock from a potential divestment”, he added.
Sentiment over Tesla has also been affected by its environmental, social and governance (ESG) record, as evidenced by S&P Dow Jones Indices removing the company from its S&P 500 ESG Index.
While Tesla does well producing environmentally-focused products, the “other two legs of the stool in ESG investing are social and governance issues, and that’s where Tesla comes up short”, according to Morningstar.
On Monday, a California state judge rejected Tesla’s bid to send a lawsuit alleging widespread sexual harassment at the company’s flagship assembly plant to private arbitration, allowing it to move forward in court.
Superior Court judge Stephen Kaus in Oakland denied the carmaker’s motion to compel arbitration in a brief order without explanation.
Lawyers for the plaintiff, Jessica Barraza, argued that an arbitration agreement she signed was invalid because it improperly required her to bring legal claims in confidential proceedings while still allowing Tesla to sue in open court.
- George Russell, with Reuters