- Tesla stock dipped overnight after an annual SEC filing raised concerns about the impact of China’s coronavirus epidemic.
- This comes shortly after the announcement of a $ 2 billion stock offering early in the day to raise capital.
- TSLA bulls are now dealing with the possibility that Elon Musk’s aggressive growth strategy has left the company exposed to an unforeseen supply-chain crisis.
After a breathtaking run, Tesla (NASDAQ: TSLA) stock has been the darling of Wall Street. Unfortunately for bulls hoping to see this trend continue, Elon Musk’s EV company may finally have met its match in China’s coronavirus. A bombshell SEC filing provided another hint that the health crisis poses a significant threat to its supply chain.
Tesla Stock Suddenly Looks Vulnerable After Hectic Day Of Announcements
Thursday began with the surprising headline that CEO Elon Musk was walking back his comments that Tesla would not need to raise capital. Tesla announced a $ 2 billion stock offering .
This is perfectly written to appease Beijing. Elon Musk’s massive bet on the Chinese market requires him to keep the best possible relationship with its government.
A fear-mongering public filing would not go down well with the CCP’s tight-lipped approach to PR.
There is no question about the dangerous nature of the coronavirus, so it’s curious to call China’s actions “precautionary.” They look essential to most people given the dramatic spread of the pathogen.
The rest of filing makes it clear precisely where the risk to Tesla stock lies. It is the company often creaking supply chain
Gigafactory Shanghai was closed for a brief time as a result, before it reopened in February and our US is rejoined factories, which had continued to operate. It is unknown whether and how global supply chains, particularly for automotive parts, may be affected if such an epidemic persists for an extended period of time. 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.
Combine this with the stock offering announcement , and it seems TSLA bulls have a real situation on their hands. Tesla dipped below $ 804 in after-hours trade.
Elon Musk’s Aggressive Growth Strategy Leaves Tesla Exposed To Unforeseen Shocks
One of the downsides to Elon Musk’s maximum growth approach leaves the company exposed to external shocks. Delays have been a common occurrence as Tesla has struggled to meet demand at times anyway. This year it appeared that Musk was winning the supply war, but that seems to have changed.
The best-case scenario for TSLA in all this is that these actions are actually “precautionary.” If so, Tesla can pad their books with some additional cash amid the uncertainty.
The worst case is that this is all a rush job to try and counter a significant, unforeseen shock to the company ability to meet its ambitious delivery estimates this year .
Disclaimer: The above should not be considered trading advice from CCN.
This article was edited by Gerelyn Terzo
Last modified: February 29, 233780 2: AM UTC
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