Investors put the brakes on Tesla's recent wild stock surge, and drove the company's shares down more than 17% on Wednesday in the wake of the electric carmaker saying the coronavirus outbreak in China will cause it to delay deliveries of Model 3 cars made at its production plant in Shanghai.
Tesla shares fell by $152.36, to close Wednesday at $734.70 after a company official in China said that early February deliveries of Model 3 cars built at Tesla's Shanghai Gigafactory will be delayed due to the coronavirus situation in the country. According to CNBC, Tao Lin, vice president of Tesla in China, said the company will have to delay making vehicle deliveries and will "catch up the production line once the outbreak situation gets better."
CNBC said it translated Lin's comments from a statement he made on the Chinese microblogging site Weibo.
China is one of Tesla's largest business markets outside of the United States, and the company had just begun to deliver cars made at its Shanghai factory in January. Last week, Tesla Chief Financial Officer Zach Kirkhorn said on the company's fourth-quarter earnings call that Tesla would stop production at the Shanghai facility for about a week-and-a-half in an effort to help contain the spread of coronavirus.
Tesla didn't immediately respond to a request for further comment about the status of its Shanghai Gigafactory.
Dan Ives, managing director at Wedbush Securities, said he believes the negative situation for Tesla in China won't last, and that the company will be back on track soon.
"It's more bark than bite as the aggressive trajectory of Gigafactory production and demand out of Shanghai look very strong out of the gates," Ives said. "It represents a speed bump that will be short lived and could move out a handful of deliveries in the region from March to the June quarter."
Still, Tesla's Wednesday stock market swoon was a reversal of what had been more than a month of historical gains for the company's shares on Wall Street.
Between Dec. 31, and the close of trading on Tuesday, Tesla's stock price more than doubled, to $887.06. At one point during Tuesday's trading session Tesla's shares climbed to an all-time high of $968.99. A combination of factors, including a strong fourth-quarter earnings report and upbeat comments from business partners, analysts and investors were credited as juicing enthusiasm for Tesla's recent stock-market gains.
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