in

3 Stocks Worth Shorting as Coronavirus Fear Grips the World, Crypto Coins News

3 Stocks Worth Shorting as Coronavirus Fear Grips the World, Crypto Coins News
  • Coronavirus could soon be declared a pandemic, scientists have warned.
  • Share price of companies with substantial exposure to China could fall.
  • American Airlines, Las Vegas Sand, and Tesla are the three stocks that present an excellent shorting opportunity.

The Chinese government has been resorting to some authoritarian techniques to curb the panic around coronavirus .

After censoring reports from reputed outlets, the Communist Party of China (CPC) seems to have gotten more desperate. Now, they are checking cell phones to make sure no videos are being taken.

The official death toll has risen to 586 but several unofficial reports suggest that the death count is much higher than what the CPC is reporting. It’s no surprise that coronavirus is expected to be declared a pandemic .

Ripples of fear have turned into tsunamis as crematoriums are being built. And some crematoriums workers are saying that they are receiving as many as bodies a day. Of course, even these numbers could be under-reported.

Coronavirus is still spreading at a rapid pace , and there’s no way the financial markets will stay immune. When the world’s second-largest economy comes to a standstill, there could be repercussions.

In my opinion, American Airlines (NASDAQ: AAL), Las Vegas Sands (NYSE: LVS) and Tesla (NASDAQ: TSLA) have the most to lose from the coronavirus panic and represent a potential shorting opportunity .

Coronavirus Could Hit all Airlines

A host of airline stocks have lost a lot of value lately because of the coronavirus epidemic. Over the last month, nearly all major carriers have lost over 12% in value.

American Airlines has been the worst performer. | Source: YCharts

Topping the list was American Airlines with a staggering 29. 3% decline. When you consider other issues surrounding the company, it looks like the worse is yet to come. The company is vulnerable in the face of unexpected shocks, like coronavirus, because of the high debt it carries.

American Airlines’ debt makes it vulnerable to external shocks. | Source: Yahoo! Finance

The carrier has also been plagued with mass cancellations. Due to the grounding of Boeing MAX, American Airlines has canceled roughly (flights a day.

It even had to shut down a flight route because of aircraft shortage. The The MAX is expected to remain grounded for the foreseeable future so the problems will persist.

American Airlines also holds a 2. % stake in China Southern Airlines. Now that China Southern Airlines is dropping all major international flights , things could get worse.

Casinos will See Less Traffic due to Coronavirus

The airline sector isn’t the only one facing potential losses. The casinos of Macau have been suffering as well.

Macau casinos rely on visitors from the Chinese mainland. Local authorities have now banned them, which means they’ll lose almost % of the total visitor count.

Las Vegas Sands, one of the biggest casino names in Macau, had an (unfavorable) . Thanks to coronavirus, could be a bigger disaster.

(Source: YCHARTS) despite the (Macau government shutting down) (casinos for) days, Las Vegas Sands jumped almost 2% Tuesday and is up another 1% after-hours. But the future looks grim and stock price will soon catch up with the reality.

Tesla’s Chinese Business could take a Hit

Tesla stock has been on a gravity-defying run and is up over 427% in alone. But a parabolic rally can only last for so long. And when a parabolic run is breached, the downfall is often faster than the rise.

Tesla’s Chinese prospects have been the dominant force behind the rally. Its Chinese business is already taking a hit because of coronavirus. CFO Zach Kirkhorn recently said production at the Shanghai Gigafactory

would be delayed by less than two weeks

.

Since the CPC has been unable to contain the outbreak, it’s highly likely that the shutdown will get extended indefinitely. While Kirkhorn said the shutdown will only ‘slightly’ affect Tesla’s profitability, it’ll get much worse if it’s extended.

Tesla’s stock is priced for perfection. Any slight misstep can cause a colossal drop overnight. The market has seemed to brush aside factory-shutdown for now, but it won’t be able to ignore an underwhelming earnings report. Consequently, shorting Tesla via put options expiring in December looks like an appealing trade at this time.

Disclaimer : The opinions expressed in this article do not necessarily reflect the views of CCN.com. The above should not be considered trading advice from CCN.com.

This article was edited by Sam Bourgi

Last modified: February 5, AM UTC

Brave Browser Read More

What do you think?

Leave a Reply

Your email address will not be published.

GIPHY App Key not set. Please check settings

Fable Fortune's Demise Proves Why Free Games Are a Waste of Time, Crypto Coins News

Fable Fortune's Demise Proves Why Free Games Are a Waste of Time, Crypto Coins News

What’s It Like to Work on League of Legends ?, Hacker News

What’s It Like to Work on League of Legends ?, Hacker News