JPMorgan Trims Tesla Stock Price Target by 41% as Automaker Reports Lower Deliveries 

Investment banking giant JPMorgan (NYSE: JPM) has cut its price target for Tesla Inc (NASDAQ: TSLA) by 41% after the EV maker reported lower-than-expected Q2 deliveries. On Monday, JPMorgan reduced its Tesla price target from $395 to $385, causing a stir in the automaker’s stock. TSLA dropped 4% after the weak report on deliveries. Currently, in after-hours trading, the company’s stock is trading at $699, slightly below its close of $699.20. Tesla has only gained 2.99% in a year, after which the EV giant has been recording seedy losses. It has lost almost 34% since the year started and decreased 38.96% in the last three months. The company has also shed 2.19% over the past month and another 4.84% in the last five days.

Precisely, Tesla deliveries for Q2 were 238,533 Model 3 and Model Ys. The company also delivered 16,162 Model S and Model X vehicles during the same quarter. The EV maker noted:

“In the second quarter, we produced over 258,000 vehicles and delivered over 254,000 vehicles, despite ongoing supply chain challenges and factory shutdowns beyond our control.

JPMorgan Lowers Target Prediction on Tesla

While Tesla stock dipped 4% on Tuesday, JPMorgan believes that the automobile company could plunge further. The multinational automotive company reported that it delivered 254,695 vehicles during the second quarter. Meanwhile, the company accounted for 310,000 cars in the previous quarter. Tesla’s Q2 deliveries were also lesser than JPMorgan’s initial estimate of 315,000. The delivered vehicles were also a little lower than the consensus estimate of $257,000. The consensus estimate was updated considering the lockdown in China due to the coronavirus.

JPMorgan referred to lower production in the Tesla Shanghai factory. The investment baking company said that Tesla could not influence the factors that led to low factory production, affecting deliveries. Despite the lower vehicle deliveries in June, Tesla had the highest vehicle production in the month. It was a 26.7% gain YoY.

Billionaire CEO Elon Musk had earlier said that Q2 was challenging for the company. He blamed the situation on supply chain and production challenges in China.

JPMorgan has always had a bearish expectation of Tesla, with the lowest price target among other Wall Street banks. The bank has also lowered its Q2 EPS estimate to $1.70 per share.

“We suspect that the interplay price and cost may matter most for Tesla earnings this year. This interplay we believe presents downside risk to 2Q, given that Tesla experienced sharp battery metals inflation but price hikes of upwards of $10k announced across its lineup generally apply only to new orders and not to existing reservations,” the experts wrote.