By
Bena Ilyas
May 13th, 2024
As a result of coronavirus fears, Tesla (TSLA) stock is hit hard, while other companies are also suffering. Three major stock indexes have plunged.
After a sustainable growth, Tesla Inc. (NASDAQ: TSLA) stock plunged more than 7% on Monday. Closing down 7.5%, the company’s shares ended the day at $833.79. Tesla stock is hit hard as a result of the sell-off driven by coronavirus fears. However, it’s worth mentioning that after hours the price is moving up. Now the TSLA price is around $854 (+2.42%).
At the end of 2019, Tesla built its plant in Shanghai and later, began manufacturing operations. The company relies heavily on Chinese suppliers, but as coronavirus fears are spreading, the global supply chain may turn into economic chaos.
According to Garrett Nelson, an analyst with CFRA, the company’s production is “so dependent on its new China factory,” that the virus’s spread will affect Tesla more than other carmakers.
He said:
“The fact is that Tesla has much greater asset concentration risk than other, more diversified competitors.”
However, coronavirus will concern not only Tesla but also other tech companies that have operations in China. Such an outcome results from a plunge of three major stock indexes. The Dow Jones Industrial Average fell more than 950 points yesterday, to settle at 27,960.80. Further, the S&P 500 dropped 1.1% to close at 3,337.75. Besides, the Nasdaq Composite Index closed at 9,576.59, tanking 1.8%.
As we see, the situation is aggravating. Tesla (TSLA) stock hit hard, other companies are also suffering. For example, Apple Inc. (NASDAQ: AAPL) stock closed down 6% on Monday. Amazon.com Inc. (NASDAQ: AMZN) stock lost 4%. Microsoft Corporation (NASDAQ: MSFT) stock has also tanked 6%.
Above all, market participants have started shifting investments from risky equities to safe-haven assets like gold and government bonds.
Tesla (TSLA) Stock Movements amid Coronavirus
Until quite recently, Tesla was showing the best performance among tech companies. It seemed that its bull run was not going to stop. On Wednesday, February 19, the Tesla (TSLA) stock price surged a whopping around 7% in its biggest single-day-jump in the last two weeks. It was trading at a price of $917 with its market-cap touching $168 billion. After that, the company announced its plan to use CATL’s cobalt-free batteries in cars produced at its Shanghai plant in China.
Further, Tesla made one more important announcement by closing its common stock offering. Just a week after its first announcement, the American automaker netted a whopping $2.31 billion in the offering. The company sold a total of 2.65 million shares to the public. Tesla CEO Elon Musk himself purchased $10 million worth of new shares. Board member Larry Ellison ended up buying $1 million in stock.
Since the beginning of 2020, Tesla (TSLA) stock doubled. In the past three months, it surged 142%.
Elon Musk has been betting heavily on Shanghai’s manufacturing facility. But now the plant does not look like promising business, at least in the nearest future. After such a growth, falling is extremely painful, but hopefully, Tesla will cope with the disaster, as its investors still keep faith with the company.