Shares of Tesla Inc sank 9 percent on Thursday, with Wall Street analysts worrying that the electric vehicle maker’s growth momentum may have hit a speed bump due to rapid inflation and logistics challenges.
At least five brokerages cut their price target on the stock, citing softer delivery in 2022, with Wedbush Securities making the biggest cut of $60 to bring its target to $300.
“The bullish narrative is clearly hitting a rough patch as Tesla must now prove again to the Street that the robust growth story is running into a myriad of logistics issues as opposed to demand softening,” Wedbush analyst Daniel Ives wrote in a note.
Tesla stock, which lost 37 percent so far this year, fell 9 percent to a 16-month low of $202.15 in early trade and was set for its worst day since June.
In its quarterly earnings report, the company pointed to challenges it was facing on the logistics front for a potential miss in hitting the delivery growth target of 50 percent this year.
Tesla Chief Executive Officer Elon Musk said on a post-earnings call that “demand is little harder” than it would otherwise be, while reiterating that the company was extremely confident of a record fourth quarter.
Tesla missed automotive gross margin expectations despite higher selling price of cars, as costs to ramp up production at its new factories in Berlin, Germany and Austin, Texas weighed.
Higher prices, interest rates and consumer sentiment could risk Tesla’s delivery growth target of over 50 percent, J.P. Morgan said.
Still, with a shift to electric vehicles gaining momentum globally, some analysts expect Tesla to be a big beneficiary.
“I don’t question demand as EVs are inevitable. (Tesla) has done a great job, there is going to be a shift to EVs,” Roth Capital analyst Craig Irwin said.
By Reuters (Reporting by Tiyashi Datta and Akash Sriram in Bengaluru; Editing by Anil D’Silva and Sherry Jacob-Phillips)