Tesla Biggest Loser From Coronavirus (COVID-19) Outbreak? Year-to-date Losses Suggest Otherwise

Mar 19
Submit

Electric automaker and energy storage product manufacturer Tesla Inc (NASDAQ:TSLA) has had a rollercoaster ride on the stock market this year. Within three months, the company's share price has jumped to record highs, and as dust from the coronavirus (COVID-19) outbreak settles, it's lost all of these gains.

Tesla's strong performance on the stock market came at a time when the company followed up strong Model 3 deliveries in 2019 with an equally strong production ramp in the Gigafactory 3. The results of these, combined with the company consistently declaring profits in 2019's third and fourth quarter injected fresh optimism that resulted in share price jumping to $968.99 at the start of February.

Tesla Shorted Shares Dropped Before Vehicle Deliveries Report; Shanghai Gigafactory Severely Underutilized?

Tesla Inc (NASDAQ:TSLA) Has Crashed - Coronavirus Hammers 61% Hit To Stock Price Since February

On January 2nd, 2020, shares of Tesla opened at $424.50, jumped up to $430.70 and then closed at $430.26. Looking at the days that would follow, a gain of 1.4% during the day would seem business as usual. The stock's stellar run on the market over the next two months would obliterate short-seller gains and see short interest in the company plateau - signaling that perhaps negative sentiment related to Tesla's fortunes was perhaps dying down for good.

Some of the biggest losses that Tesla shorts faced on the open market came in between January's final week and February's first. During the course of trading on January 31st, investors short-selling Tesla stock had lost roughly $545 billion through their positions via mark-to-market losses.

These losses, however, were not the end of the road for shorters. Within days, on February 3rd, the investors further extended their losses by a third-of-a-billion ($300 million). During the day's trading, Tesla Inc's share price jumped to $748.59, marking for 76% year-to-date gains at the time, picking up a momentum that would see short sellers lose $16 billion over the course of the last four years and $20 billion since Tesla's incorporation.

The last time Tesla traded in the ~$360 share price range was in December 2019. Following the Gigafactory 3's successful ramp, the share price peaked above $900 in February; Koyfin

Peer analysis reveals Tesla is not the biggest loser in year-to-date losses from Coronavirus (COVID-19) outbreak

The next day, share price rocketed to an all-time high of $968.99 as Tesla closed at $887.06, having gained 108% during the year. Yet, now, as markets all around continue to tumble, Tesla has wiped off all these gains from the market and based on its closing price yesterday, the automaker has now shed all of this unprecedented growth following COVID-19 and factory shutdowns.

At the time of writing, Tesla has lost 61% of its value based on the record high price the stock closed on February 19th. This drop might make the company look like the biggest loser on the stock market from the coronavirus outbreak, yet a comparison with its peers tells a different story. If you don't believe us, take a look at some other tech and other stocks' losses since February 19th which can all be ascribed reasonably to COVID-19:

Tesla’s Donation of 1,000+ ‘Ventilators’ Won’t Help Critically Ill Patients

Closing Prices, % January 2, 2020: February 19th, 2020: Latest: YTD: Since 2/19:
Tesla: $430.26 $917.42 $361.2 -16% -61%
Daimler: €49.98 €42.77 €21.66 -57% -49%
BMW: €74.22 €65.45 €38.59 -48% -41%
Toyota: ¥7,565 ¥7,542 ¥6,395 -15% -15%
Ford: $9.42 $8.00 $4.50 -52% -44%
General Motors: $37.38 $34.92 $16.80 -55% -52%

Looking at year-to-date drops, Tesla is second from last when we look at share prices of major automobile manufacturers. The biggest loser is Daimler, reflecting the market capitalization wipeout witnessed in Germany over the past couple of weeks. In second place is General Motors, whose price has dropped by more than half over the course of 2020, with the biggest drop taking place following February 19th.

Vehicle production in Tesla's Fremont plant.

Analysts now certain that company will be unable to meet vehicle delivery targets in 2020

Tesla's share price drop over the past few weeks and especially this week can be attributed to market pessimism for automobile sales. Auto sales in China plunged by nearly 70% in February, and the EV-manufacturer did not see much love from American regulators this week either. Tesla's Fremont plant will continue operations with a quarter of its workforce according to the latest details with reports of its complete shutdown sending the stock price plateauing down to December 2019 levels mentioned above.

Tesla's decision to continue operations with 2,500 of the plant's 5,000 workers did not assuage concerns yesterday, but in a small silver lining, the automaker's share price jumped to $372 in aftermarket trading on 8:00 PM, ET.

Wall Street analysts, for their part, remain cautiously optimistic about the company's future. Loup Ventures' Gene Munster believes that the long-term impact from Fremont closure will be negligible since Tesla's cash reserves of roughly $8.6 billion will let the company ride out demand drops. The analyst is very optimistic about Tesla's prospects for 2020, as he believes that the company will exceed the auto industry's growth rate by at least 25% this year.

Wedbush's Dan Ives cut down the firm's price target for Tesla Inc by 40% today (to $425 from $710) to reflect the coronavirus (COVID-19) disruption. Both Munster and Ives, however, admit that Tesla will fall short of vehicle delivery estimates this year due to lockdowns taking place inside the United States and Europe. Munster believes that Tesla will be unable to meet Loup Ventures' vehicle delivery target of 468,000 by the end of this year, and Ives states that Tesla's self-set target of 500,000 vehicles deliveries is unachievable following COVID-19.

At the time of publishing Tesla Inc NASDAQ:TSLA) is up 0.49% in premarket trading following another massive 16% drop share price yesterday. With the average cost of a gallon of gas falling to $2.23 (a three year low) the automaker now has a tough road ahead of it.

Submit