Tesla Shares to Rise Again in Q3, Making Up for Losses, Morgan Stanley Believes

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Tesla (NASDAQ: TSLA) received another very optimistic forecast, this time from Morgan Stanley. The firm believes that the value of the manufacturer's shares will start recovering in Q3 2022, as Tesla will be able to catch up, as its history of development shows.

Morgan Stanley analyst Adam Jonas sees a significant improvement for Tesla going forward. His view remains positive even as other analysts have lowered their price targets for TSLA shares. Jonas sees growth in the company's future once it survives the current quarter, he wrote in a note to clients. As turbulent as Q2 of 2022 is, he sees a recovery in stocks in Q3.

Q2 2022 was very difficult for Tesla as its Giga Shanghai—which produced more than 50% of the company's vehicles in 2021—was closed for more than three weeks, followed by a long recovery process with limited capacity. Although the factory's performance has now recovered to 100%, for most of Q2, it did not operate as planned by Tesla.

“This has been a very tough quarter, primarily due to supply chain and production challenges in China, so we need to rally hard to recover!” Elon Musk told Tesla employees in a leaked email.

Jonas believes that it is the team's united and dedicated work that will help Tesla catch up in Q3. He acknowledges that Giga Shanghai is a key driver of both production and the company's earnings, but expects the company to rebound in the next quarter.
“As Tesla has shown throughout its history, it can make up substantial lost ground with accelerated deliveries into the close of a quarter where disproportionate amounts of a full quarter’s production can occur in the final week or two.”

Jonas recalled that Tesla has already met difficult macroeconomic obstacles on several occasions and has always overcome them, so nothing will change this time. “Consensus forecasts of <$18bn total company revenues appear to discount a sequential QoQ decline in delivery volume (to below 300k units for 2Q)” the analyst wrote. “Any lingering impact of the Shanghai lockdown on Tesla production probably resolves itself before year end.”

© 2022, Eva Fox | Tesmanian. All rights reserved.

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Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.