Tuesday Dec 27, 2022
As of this writing, Tesla is trading at 112.37-10.78 (-8.75%) with heavy volume of 153,588,522.
It’s PE is now at 34.49 and forward PE is 21.04.
The declines comes after reporting from WSJ that Tesla Shanghai has suspended operation since Saturday and will extend the halt. This did not come from Tesla and is based on WSJ talking to people who may have information about this. According to the article, the factory will resume work January 2nd. The reasons could be lower demand and factory workers contracting COVID following the removal of COVID restrictions. This raises some near term fear about demand and add uncertainty. Investors may also be selling on the sentiment that next year will be a recession and demand for EVs will drop.
Another factor contributing to the decline is NIO, an EV maker in China has released a public press release that they would adjust their deliverables lower. Nio announced the following statement: “The Company now expects to deliver 38,500 to 39,500 vehicles in the fourth quarter of 2022, adjusted from previously released outlook of 43,000 to 48,000 vehicles.”
These figures represent a decline of 4500 units or 10.4% on the low end of the projection and 8500 or 17.7% on the high end of the projection. NIO mentioned that part of the challenge is supply chain disruptions resulting from the Omicron coronavirus outbreak in major cities in China. The project from NIO paints a challenging environment in China near term.
COVID in China will eventually be under control when more people get vaccinated and more effective vaccines become available.
To combat decline in demand, Tesla has lowered prices in China.