TWTR

Twitter, Inc.

38.23
USD
2.25%
38.23
USD
2.25%
31.30 73.34
52 weeks
52 weeks

Mkt Cap 30.57B

Shares Out 799.61M

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Why Tesla Stock Turned South Today

What happened After a brief respite on Monday, shares of electric-vehicle (EV) leader Tesla (NASDAQ: TSLA) turned back south again on Tuesday. As of 11:50 a.m. ET today, the stock was down 4.5%. So what Tesla has announced plans to resume full-capacity production of EVs at its Shanghai Gigafactory as early as today. If it succeeds in getting production back up to full speed, it could be churning out nearly 950,000 vehicles per year in China, putting it back on track toward its goal of producing 1.5 million EVs per year. But probably not this year. As Daiwa warns today in a note covered by The Fly, Tesla has already lost about 100,000 units of potential production in Shanghai as it sat on the curb and waited for Chinese COVID-containment regulations to lapse. Adding to Tesla's troubles, Daiwa believes production ramp-ups at Gigafactories in Texas and in Germany have been slower than planned, reducing total 2022 potential production by another 80,000 vehicles. Result: In a year when Tesla aimed to produce 1.5 million EVs, it might succeed in building only 1.2 million. Now what And that's OK. On the one hand, Daiwa cites this expected production miss as the reason it's cutting its price target on Tesla by more than 30%, to $800 a share. Yes, this lower value on shares could complicate Elon Musk's plan to finance his acquisition of Twitter (as analysts at Bernstein commented today). And yes, rival Volkswagen could very well try to take advantage of Tesla's weakness at this point to accelerate its own EV plans and overtake it in sales by 2025. But it's pretty irrelevant whether Tesla achieves 1.5 million EVs produced this year. In the grand scheme of things, that's a short-term and rather arbitrary milestone. What's important is whether the company succeeds in producing at the rate of 1.5 million cars per year after the lockdown ends. And not only does Daiwa think it will, but that analyst estimates the company will keep growing its production, probably hitting 1.8 million cars in 2023. That's the goal you should focus on: What happens after the lockdown goes away, and Tesla's growth is able to rev higher unhindered. As long as it keeps doing that, this growth story remains intact. Find out why Tesla is one of the 10 best stocks to buy now Our award-winning analyst team has spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed their ten top stock picks for investors to buy right now. Tesla is on the list -- but there are nine others you may be overlooking. Click here to get access to the full list! *Stock Advisor returns as of April 27, 2022 Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla and Twitter. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

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