Bearish energy is sweeping Wall Street, but one analyst thinks Tesla (NASDAQ:TSLA) will recover. Adam Jonas of Morgan Stanley has been bullish on Tesla for some time, even as other experts have slashed their TSLA stock price targets. Now the analyst foresees growth in the company’s future once it survives the current quarter. As turbulent as the second quarter of 2022 has been, he sees TSLA stock rebound in Q3.
What’s Happening With TSLA Stock
This week is off to a rough start for many high-growth tech stocks, and TSLA is no different. Shares fell yesterday and have been quite volatile today, plunging as markets opened only to fall just as sharply. TSLA stock was down almost 1.5% earlier this the morning, but recovered those losses as of this writing. Where it will go from here is impossible to predict given the volatility trends.
This turbulence has become commonplace for TSLA stock during this quarter. So why does Jonas see the negative trend reversing in the coming months? Let’s take a closer look.
A Strong History
“This has been a very tough quarter, primarily due to supply chain and production challenges in China, so we need to rally hard to recover!” Elon Musk told Tesla employees in a leaked email.
Jonas knows this, and he thinks Tesla will see exactly that in Q3. He acknowledges the Shanghai gigafactory is a key driver of both production and revenue for the company. But even with the production setbacks Tesla Shanghai has suffered throughout Q2, he sees the company recovering in the next quarter. In a note to clients, he laid out the following:
“As Tesla has shown throughout its history, it can make up substantial lost ground with accelerated deliveries into the close of a quarter where disproportionate amounts of a full quarter’s production can occur in the final week or two.”
As the analyst sees it, Tesla has overcome steep macroeconomic headwinds before, and this time will be no different. “Consensus forecasts of <$18bn total company revenues appears to discount a sequential QoQ decline in delivery volume (to below 300k units for 2Q).” he writes. “Any lingering impact of the Shanghai lockdown on Tesla production probably resolves itself before year end.”
While it’s true factories in Shanghai have been resuming work, a recent outbreak in Beijing has threatened to set back China’s progress. However, it remains unclear what this means for Shanghai or for its companies. Tesla has been working hard to make up for the production time it lost in April. Musk certainly won’t want to slow down again.
The Road Ahead for TSLA Stock
Even as TSLA stock has fallen recently, some experts have focused on its growth potential. Morgan Stanley isn’t the only Wall Street bank to recently take a bullish stance on it. UBS recently reiterated a “buy” rating and described its prognosis as “stronger than ever.”
One growth catalyst that Jonas did not account for is the potential TSLA stock split. Pending shareholder approval on Aug. 4, Tesla will enact a 3-for-1 stock split, likely leading to a trading frenzy. The electric vehicle leader could be headed for a stronger-than-expected Q3. It just needs to survive the current quarter — and it will.
On the date of publication, Samuel O’Brient 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.
