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Tesla Stock Falls Again. It Isn’t Shanghai or Wall Street. It’s Snap.

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Tesla cars sit parked in a lot at the Tesla factory in Fremont, California.

Justin Sullivan/Getty Images


Tesla

stock is falling again in early Tuesday trading. The likeliest reason isn’t related to the EV makers Shanghai plant or even price target actions at a broker. No, the drop is probably because of the social media platform


Snap
.

Snap (ticker: SNAP) warned investors revenue would be weaker than expected Monday evening at the J.P. Morgan Technology, Media and Telecom conference.

“Well, the macroeconomic environment has definitely deteriorated further and faster than we expected when we issued our guidance for the second quarter,” said CEO Evan Spiegel. “So even though our revenue continues to grow year-over-year in the second quarter, it’s likely that revenue and Ebitda will come in below the low end of our guidance range.”

Ebitda is short for earnings before interest, taxes, depreciation and amortization.

Snap expected second quarter sales to come in between $1,179 billion and $1,228 billion. Wall Street was modeling $1,184 billion.

Snap stock is down 30% in premarket trading Tuesday. That’s driving

Nasdaq Composite
futures down about 1.7%. Tesla (TSLA) stock is off 2.6%.

Tesla is down despite some progress on restoring the company’s Shanghai plant to full production. Tesla is quarantining workers in preparation for a second shift at the Shanghai plant, Bloomberg reported Tuesday. Workers have to be Covid-19 free and isolated for the plant to operated in a “closed loop” setting. Closed loop in this sense is essentially having virus-free workers have no contact with the outside world.

Tesla’s Shanghai plant was shut completely for some weeks in early April. The plant has been operating at reduced capacity since late in the same month. Many workers are living at the plant, largely because it is an opportunity to get paid after weeks of isolation in homes. Tesla didn’t respond to a request for comment about the restart.

The Shanghai restart is a positive even if the persistent Covid issues in China remain a negative. Another negative that may be weighing on shares is a price target cut at Daiwa. Analyst Jairam Nathan lowered his price target to $800 from $1,150. But he kept his Buy rating on shares. The revision was driven by lower deliveries in 2022 and 2023, partly because of Shanghai lockdowns.

Nathan now sees Tesla delivering 1.2 million vehicles in 2022 and 1.8 million in 2023. The Wall Street consensus calls for 1.4 million and 2.1 million units in 2022 and 2023, respectively.

It’s been a difficult run for Tesla stock lately. Coming into Tuesday trading, Tesla stock is down about 36% year to date, worse than the 16% and 26% comparable, respective drops of the

S&P 500
and Nasdaq. Tesla shares have moved more than 1%, up or down, eight of the past 10 trading days. Shares have fallen six times and are down about 15% over that span.

Write to Al Root at allen.root@dowjones.com

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