Update at 9:41 am EST
Tesla (TSLA) shares edged modestly lower Thursday even as reports suggest the clean-energy carmaker will likely extend the closure of its Shanghai gigafactory as China's biggest city remains on Covid lockdown.
An internal memo suggests Tesla, which closed the Shanghai plant on Monday as the city entered an extraordinary lockdown amid a resurgence in Covid infections, won't resume production until at least April 3.
Tesla sold around 116,360 China-made cars over the first two months of the year, according to official trade data, most of which were bound for export to markets in Europe and Asia, and it has largely absorbed the impact of the delayed opening of Tesla's Berlin gigafactory and supply chain disruptions that have hindered production in California.
"We see the recent China Covid flare-ups as a potential risk to the downside," said Credit Suisse analyst Dan Levy, who carries an 'outperform' rating with a $1,025 price target on Tesla stock. "Given Tesla deliveries are typically heavily weighted toward the end of the quarter, it is certainly possible that Tesla’s likely quarter-end wave will be somewhat limited by the rise of COVID (albeit, the shutdown is not nationwide, thus it’s unclear how much the shutdown will impact deliveries)."
Tesla shares were marked 0.85% lower in early Thursday trading to change hands at $1,084.70 each, a move that would trim the stock's one-month gain to around 26%.
Tesla will post its first quarter delivery figures tomorrow or Saturday, with analysts looking for a tally of around 313,000 units.
Late last year, Tesla founder and CEO Elon Musk said the Model S Plaid, the car-maker's high performance luxury sedan, will be made available in China "probably around March".
The Plaid, priced at $140,000, has a charge range of 520 miles and reportedly can reach top speeds of 200 miles per hour.
"With China being the biggest EV market, Tesla’s ambitious production plans in the country turned out to be fruitful. Increased production of Model 3 and Y from Gigafactory in Shanghai is assisting top-line growth," said Crisp Idea analyst Nanda Sai, who carries a 'buy' rating with a 12-month price target of $1,087.00 on Tesla stock.
"The Shanghai factory is ramping up production and commands a significant market share in the China EV market and the company remains focused on further improvements to increase production rates," he added.
Tesla will also publish earnings for the three months ending in March slated for publication on April 25.
Early indications suggest analyst are looking for revenues in the region of $17.57 billion, up 68.3% from last year and profits of around $2.24 per share.
