Reply To: Tesla Delivers Record Earnings Despite Global Supply Chain Headwinds


Musk’s email about the economy and job cuts isn’t the only concern facing TSLA investors.

Recent lockdowns in China will significantly impair production and delivery totals for Q2. According to Reuters, its Shanghai facility was closed for 22 days and was operating at about 70% capacity earlier this week. Since the Shanghai plant accounts for more than a third of TSLA’s total deliveries, the disruptions there are bound to impact its Q2 results.

During the Q1 earnings conference call, Musk commented that a 60% yr/yr increase in deliveries is possible this year, but that’s looking increasingly unlikely.

Musk’s $44 bln acquisition of Twitter (TWTR) continues to swirl in the background. There was some hope among TSLA investors that Musk would abandon the deal due to questions regarding fake accounts, but those hopes were dashed last week when he increased his financial commitment to $33.5 bln. The further TSLA shares slide, the more stock he will potentially have to sell to finance the deal, which is adding fuel to the fire.

The prospect of TSLA cutting 10% of its workforce — equating to roughly 10,000 employees — seemed highly improbable a couple weeks ago. While supply chain issues and factory closures have created major challenges for TSLA in the past, robust demand and solid execution has allowed it to withstand those headwinds. If Musk’s prediction regarding the economy comes to pass, though, the strong demand that TSLA has relied upon so heavily could weaken.