Tesla (TSLA) stock has plunged as the company has announced a delivery delay caused by the fears related to the coronavirus epidemic.
Much to the disappointment of many, Tesla (TSLA) stock has begun to fall amid the coronavirus. Tesla, which has been on a very impressive and largely unprecedented surge for a while now, has shed some of its weight because of a delivery issue connected to the epidemic.
TSLA Stock Crash
On Wednesday, Tesla vice president Tao Lin announced that the company might falter on its delivery schedule. Customers had initially expected Tesla to deliver cars early this month. However, Tesla has now said that this might be impossible because of the outbreak of the coronavirus. According to a CNBC translation, Lin said:
“The proposed delivery in early February will be delayed. We will catch up the production line once the outbreak situation gets better.”
In response to this announcement, Tesla shares fell 17.18% breaking the amazing surge it had maintained in the last few days. On Monday, Tesla had jumped 20% and climbed almost 14% on Tuesday.
The 17% drop has now gone into Tesla’s books as the company’s second-highest single-day drop of all time. The worst happened back in 2012 when it lost more than 19%.
Coronavirus Is Killing Tesla Stock
In October last year, Tesla secured an advantageous agreement with the Chinese government. This was the first time China allowed a company fully-owned by a foreigner to set up a factory in the country. Tesla took advantage of this deal and built its Shanghai factory from start to finish in less than a year.
Tesla began to deliver new Model 3 cars fully made in China on the 7th of January. Since then, many Chinese customers have taken possession of their cars as Tesla takes a big chunk of the electric vehicle market in China. However, since the spread of the coronavirus, the company, along with many other businesses in China have slowed down. Recently, Tesla announced that it was shutting down its locations in China until some respite is seen with the containment of the coronavirus.
According to Zach Kirkhorn, the Tesla Chief Financial Officer, there’s a good chance that the coronavirus development might hamper Tesla’s figures. Kirkhorn said:
“This may slightly impact profitability for the quarter but is limited as the profit contribution from Model 3 Shanghai remains in the early stages.”
At the moment Tesla is trading a little over $707. Even with the recent crash, Tesla still boasts of almost 47% gains in the last one month. In 2020 alone, Tesla has climbed over 69%. In the last year, Tesla has climbed more than 130%. However, the financial services company Canaccord recently demoted its rating on Tesla stock. The company which held Tesla shares on a “buy” rating has now switched it to “hold”. It has however left its price target at $750.
Recently, Coinspeaker reported that Tesla CEO Elon Musk had crossed a new milestone according to his agreement with the company’s shareholders. However, the recent crash has put a damper in things, as Tesla’s market capitalization has now dropped to $132.43 billion.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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