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Tesla (TSLA) trades sideways as market digest earnings beat but has questions about short-term growth

Tesla (TSLA) has been trading sideways despite beating expectations with its Q2 2021 earnings.

The market is digesting the results, but Tesla has created questions about its short-term growth due to supply chain issues.

On Monday, Tesla released its Q1 2021 results, and it beat Wall Street expectations on both revenue and earnings.

Yet, Tesla’s stock has been trading sideways since the release.

Some Wall Street analysts have been releasing new notes about their reactions to the results.

Most of them agree that Tesla performed better than expected over the last three months, but there are mixed feelings about the comments from the automaker regarding short-term growth.

While Tesla has managed to navigate the currently challenging supply chain landscape due to the chip shortage and logistical bottlenecks, the automaker made it clear that those issues will still limit its production in the second half of the year.

But the bigger concern is that Tesla still has some significant work to do in order to bring its 4680 cell to volume production.

Tesla still believes that it will be able to bring the Model Y to production at Gigafactory Texas and Berlin by the end of the year, but the volume will be limited until Tesla can secure a large supply of 4680 cells.

The limited supply also pushed Tesla to delay the Tesla Semi program to next year, when they secure more cells, and while the automaker didn’t confirm that Cybertruck is also delayed to next year, it appears extremely likely at this point.

Morgan Stanley analyst Adam Jonas, who was already conservative about the Cybertruck ramp-up, released a new note revising his expectation for the electric pickup truck:

Delay of Cybertruck production to FY22. We now expect Cybertruck volumes to start in 2022 and ramp from 15k units in 2022 to 283k by 2030. We assume an ATP of $65k in 2022″

The firm is maintaining its $900 price target on Tesla following the new record quarter.

Canaccord has lowered its price target on Tesla to $768.00 from $812.00 sighting the supply chain concerns for the second half of the year.

Electrek’s Take

Tesla is showing a lot of resilience to supply chain issues with strong results, but Elon Musk was clear during the call that it is still a limiting factor going forward.

Investors were counting on Model Y production at Giga Texas and Berlin for Tesla’s growth this year.

While the automaker is still guiding a start of production by the end of the year, at this point, it is becoming clear that volume will still be very limited.

I was especially concerned about Musk mentioning that Tesla even has a backup plan to use 2170 cells in those new Model Y vehicles if 4680 cells are not ready.

At this point, I think it’s safer to expect that Tesla’s next significant delivery growth won’t come until deeper into 2022.

I think the bull case for 1 million cars in 2021 is starting to sound like a pie in the sky, but the good news is that demand for it is certainly there.

On the profit front, things are looking brighter, but that’s most likely attributable to the price increases, which Tesla can afford thanks to strong demand.

In Morgan Stanley’s new note, Jonas is leading with the expectations that Tesla’s EBITDA is going to be bigger than Ford’s and GM’s combined by 2025, but I am not too impressed by that considering Tesla is already worth more than five times those two companies combined.

What do you think? Let us know in the comment section below.

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