Tesla Drops By $140 During Trading – Coronavirus To Blame?
Tesla Inc has had a record-breaking run on the stock market over the past couple of days which has seen the company's market capital swell to $158 billion at the peak of a bull run that has obliterated short-sellers. At the close of trading yesterday, the company had a share price of $887.06, after it dropped by $87 a handful of minutes prior to 4:00 pm Eastern Time. During the day's trading yesterday, Tesla touched a new all-time high share price of $968.99, leaving the company less than $32 short of a $1,000 share price.
Well, after the company's executives confirmed that Model 3 deliveries from the Shanghai Gigafactory 3 will be affected due to the Coronavirus, Tesla is finally touching the ground on the open market. While there is no way for us to determine whether news of an event beyond Tesla's control can impact the company's share price to the extent that it has dropped today, especially when it has been known for a week that output from the Shanghai plant will drop, one can not help but speculate that this is indeed the case.
Tesla Inc (NASDAQ:TSLA) Drops Big Following Gains - Fuelled by Coronavirus-Related Production Halt?
In addition to causing a devastating loss of life around the world, the 2019 novel coronavirus has also harmed stocks all around the world. Cupertino tech giant Apple, despite reporting growth in iPhone sales in its previous quarter, saw its share price go down last week, on the back of a general slowdown exhibited by the S&P 500 and other indexes who are yet to recover to pre-drop levels.
Now, following Tesla's drop of $132 during trading today, we can't help but wonder if the respiratory illness impacting thousands in China is also responsible for slowing down a run that became the center of everyone's attention during the course of this week. As we converse, Tesla is down to $772.71 on the open market, marking for a drop greater than 13% over yesterday's close; a drop equalling $115 in value.
After dropping down to $747.01 during the course of trading today, Tesla is recovering slowly as evidenced by the aforementioned share price. Trading volumes for the stock remain within 1.5 times of its daily average, and given that a big chunk of the optimism responsible for pushing the stock to new highs on the open market came from Tesla's ability to deliver vehicles on time, especially from the Shanghai Gigafactory, it's looking highly probable that the Coronavirus might have stopped a run that some expected to cross $1,000 this week.
Analysts remained cautious but not pessimistic today as they expressed mixed sentiment for the company's value. Canaccord downgraded the stock to hold and reduced its price target to $750, while Wedbush securities remained cautiously optimistic. Maintaining a $1,000 price target for the company, Wedbush analyst Dan Ives believes that the Gigafactory 3 has the potential to pump out at least 150,000 vehicles over the year, with demand for Teslas matching this output in China.
Tesla reported a 2% year-over-year revenue growth in its latest fiscal quarter, and the company also reported positive net income in a sign that things are finally on the right track for it. The automaker's recent run on the stock market has seen its market value exceed competitors and caused investors betting against it serious losses. Whether Tesla will cross a $1,000 share price on the open market remains to be seen, and given today's performance, it might be some time before the company crosses this target.
Crossing $1,000 on the stock market also looks unlikely given the company's less-than-stellar fundamentals. For its fourth quarter of 2019. Tesla also reported a 4% gross profit and a 28% earnings-per-share decline year-over-year. As the company's share price drops, it's looking as if investors are also finally factoring in these metrics.