This Metric Will Be The Street's Focus With Tesla For 2022: Wedbush

Tesla Inc TSLA investors would turn their attention towards the company’s overall unit growth for the rest of the year amid a lingering semiconductor shortage and plans to add significant capacity with two new gigafactories as it reports quarterly earnings on Wednesday, according to Wedbush Securities.

The Tesla Analyst: Wedbush analyst Daniel Ives has maintained an Outperform rating and a $1,400 price target on the Elon Musk-led company’s shares.

The Tesla Thesis: Ives said Tesla’s commentary on unit growth is key as supply chain issues are expected to significantly moderate this year after being a major drag in 2021. 

Ives said he believes the 1.5 million unit volume seems like within reach annually for Tesla in 2022.

The analyst said Tesla’s “emerging fundamental story” will be back in focus and estimates its current demand outstrip’s supply by about 30% globally. The analyst said the issue is centred around the Giga openings in Austin and Berlin, which will help solve the bottlenecks of production globally. 

“We believe by the end of 2022 Tesla will have the capacity for overall ~2 million units annually from roughly 1 million today.”

Tesla smashed fourth-quarter delivery numbers and posted its biggest volume for both the fourth quarter and the full year, earlier this month. The Musk-led company said it delivered 936,172 vehicles, a jump of 87% compared to 2020 when deliveries came at about half a million vehicles.

See Also: Tesla's Gross Margin In Focus With Q4 Earnings As Investors Look For Apple-Like Growth Story: Munster

Under Pressure: Tesla shares have been under pressure along with the rest of the growth space over the last month amid fears the Federal Reserve will raise interest rates.

The stock is down 22.5% year-to-date and retreated below the $1 trillion market cap, despite the Austin, Texas-based company crushing fourth-quarter delivery volumes amid supply headwinds and chip shortages.

“While China will be a key growth driver, we believe demand is building for Tesla's Model Y in the U.S. and Europe with 2022 likely another breakout year for Tesla and the EV industry,” Ives wrote in a note.

A Tesla bull, Ives said that despite logistical hurdles in the near-term cost, he believes Tesla can further expand its gross margins and profitability profile over the next 12 to 18 months especially with “more higher-margin cars” being sold and produced in China.

Tesla is scheduled to report fourth-quarter earnings after-hours on Wednesday.

Price Action: Tesla shares closed 1.47% lower at $930 a share.