Tesla Bear Gordon Johnson Says Production Cutback Imminent At Giga Shanghai

Close on heels of two sell-side downgrades, another analyst is offering a bleak outlook for high-flier Tesla Inc TSLA.

The Tesla Analyst: GLJ Research's Gordon Johnson maintains a negative bias on Tesla shares and has a year-end price target of $87.

The Tesla Thesis: Tesla may have produced 1,366 Model 3 LRs and 10,135 Model 3 SR+s at its Shanghai Gigafactory in May, comprising the 11,501 figure reported by the Chinese Ministry of Industry and Information Technology, Johnson said in a note.

The numbers were derived from battery statistics reported by suppliers, the analyst said. 

The Shanghai Gigafactory has an aggregate production capacity of around 3,600 vehicles per week, although 400 LRs may have been produced per week in May, he said. 

Johnson is of the view that Tesla's June sales, particularly for the Model 3 LR, will be far below automaker and Street's estimates due to production constraints.

With data suggesting the company has elevated unsold inventories of SR+s relative to demand, and the production capacity of LRs being limited, the analyst said the company is unlikely to make more SR+s that could eventually go unsold.

An imminent scale back in production or a shutdown of the Shanghai Gigafactory is likely, Johnson said. 

The analyst lowered his second-quarter delivery estimate for Tesla from 74,383 to 72,840, citing weaker U.S. sales and weaker-than-expected China sales.

"We believe a slowing of production at TSLA's China Shanghai plant will come as a negative "shock" to many TSLA bulls – China, after all, is the current "growth" market for TSLA," he said. 

TSLA Price Action: At last check, Tesla shares were slipping 4.47% to $929.38.

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Photo courtesy of Tesla.