Electric Vehicle juggernaut Tesla (NASDAQ:TSLA) stock will be increasing its output in its Shanghai facility to restore production to levels before new cases of the coronavirus lock down the city.
An internal memo revealed that Tesla would be ramping up production to 2,600 cars a day in its Shanghai plant by mid-May.
It plans to run just one shift out of the three it ran in the facility before the lockdown. Weekly rates are likely to increase to 16,900 vehicles, with the average Tesla work week.
The disruption at Tesla’s Shanghai facility has been one of the more talked-about consequences of China’s efforts to control the coronavirus outbreak. The lockdowns have had a detrimental impact on automobile sales, consumption, and other elements.
EV sales were on fire in the country before the recent lockdowns. Tesla’s sales in China shot up over 50% in its first quarter. Moreover, in March, Tesla assembled 55,462 cars in its Shanghai plant before the six-day production halt.
Tesla has been on quite the run, consistently outperforming market expectations. Its revenues, profits, and cash flows are soaring and will continue to turn heads for the foreseeable future.
In its most recent quarter, its revenues came in $0.96 billion ahead of estimates at $18.76 billion. Moreover, earnings came in at an incredible $3.22 in the first quarter, a 254% improvement from the prior-year period.
However, the main investor concern surrounding Tesla has been its meteoric valuation. It trades over 50 times forward cash flow estimates and around ten times forward sales.
Analysts at Refinitiv have an incredibly high spread for TSLA stock, which ranges from $67 to $1,620 per share. Therefore, the stock is bloated, and it’s best to wait for a massive pull-back before investing in it.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
