Salem Radio Network News Friday, July 1, 2022

Business

Tesla drops after supply chain warning, drags down other EV makers

By Noel Randewich

(Reuters) – Shares of Tesla Inc slumped on Thursday, with smaller competitors also taking a hit after the leading electric vehicle maker warned that supply chain problems will last throughout 2022.

Tesla’s stock dropped 8% and was on track for its worst one-day percentage decline since early November after the company late on Wednesday posted a strong quarterly report but warned that component shortages would limit production this year.

Shares of several other electric vehicle makers also fell, with Rivian Automotive Inc last down 9% and set to close at its lowest level since the EV pickup truck maker’s Wall Street debut in November.

Lucid Group Inc dropped 11%, Lordstown Motors Corp lost 8% and Nikola Corp fell over 7%. U.S. shares of Chinese EV maker Xpeng Inc slumped almost 9%.

The slump in EV stocks was far worse than the Nasdaq’s 0.3% decline by midday.

On Tesla’s quarterly conference call, Chief Executive Elon Musk said volume growth would comfortably exceed 50% this year despite the supply chain troubles. He also said Tesla in 2022 would focus on ramping up production rather than launching new products, such as an upcoming Cybertruck and a more affordable car.

At least six analysts raised their price targets following Tesla’s report, with some looking beyond current supply chain limitations and pointing to the company’s strong growth expectations.

“With Tesla’s demand to exceed supply likely for the foreseeable future, Tesla’s path of volume will be purely a function of its production,” Credit Suisse analyst Dan Levy wrote in a research note.

Tesla’s stock has declined about 30% from its record high close on Nov. 4.

The median analyst price target is now $1,087, which is about 26% above Tesla’s current price of $862.89.

(Reporting by Noel Randewich; editing by Jonathan Oatis)

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