By
Temitope Olatunji
April 24th, 2024
Tesla has now acknowledged the coronavirus as a serious risk in the company’s plans. Tesla says the epidemic could affect TSLA stock and the company’s progress.
Tesla is easily the most interesting company in the world right now, because of its extremely parabolic stock. Currently trading at $788.99, TSLA stock has already pulled in more than 92% gains this year alone. However, even as it enjoys its new status, Tesla has admitted that the current coronavirus outbreak is strong enough to put a dent in its business.
Tesla Says Coronavirus Could Be Adversarial
On Thursday, Tesla published its annual 10-K filing to the United States Securities and Exchange Commission (SEC). The filing contains a section titled ‘Risk Factors’ which details factors that could negatively affect Tesla’s “business, financial condition and future results.” Tesla has now added “health epidemics” as a possible risk factor.
While Tesla scatters the phrase in several parts of the section, it specifically references the new coronavirus (COVID-19) without directly mentioning its name. The company describes a health epidemic that started in China late last year and its subsequent effects. Tesla mentions that the Chinese government has significantly restricted movement to curb the spread. This restriction, Tesla says, could affect the company’s supply chains for the parts it uses for manufacturing and assembly. It adds that if there is no solution soon, things could get worse.
“We may incur expenses or delays relating to such events outside of our control, which could have a material adverse impact on our business, operating results and financial condition.”
Tesla Wasn’t Worried about the Coronavirus
A while ago, Tesla did not think the coronavirus would be too problematic. At the company’s fourth-quarter earnings call, Tesla CFO Zach Kirkhorn seemed to underestimate the virus and its effect.
Kirkhkorn, at the time, said the Chinese government’s compulsory factory shutdown would only “slightly” dent the company’s performance. The CFO said that the problem wouldn’t affect the company’s normal production at the factory in Fremont, California.
Tesla Shut Down China Stores, TSLA Stock Reacted
Earlier this month, Tesla succumbed to fears of the coronavirus spread and temporarily shut down all of its stores in mainland China. While health reasons necessitated the decision, Tesla shares plunged from $960 at the time, to $734.
Around the same time, Tesla vice president Tao Lin announcedthat the coronavirus would delay its normal delivery schedule. The announcement also didn’t give a specific time that normalcy would resume, causing stocks to fall more than 17%.
Coronavirus Worsens
China began using computerized tomography (CT) scans to test for the virus, in addition to ribonucleic acid (RNA) tests. The new method spiked confirmed cases by an additional 15,000, pushing the total towards 60,000. Of the confirmed cases, more than 8,000 are critical with almost 1,400 fatalities confirmed. The epidemic is currently far from proper resolution.