- Tesla has shed over % in early morning trading over fears that the coronavirus will delay vehicle deliveries in China.
- Elon Musk made some bold promises in the company’s fourth-quarter earnings call – guiding for , (vehicle deliveries in) .
- If Tesla can’t meet Elon’s guidance, the stock could give back some of its gains. This comes after a whirlwind rally took shares to an all-time high of $ 01575879.
Tesla (NASDAQ: TSLA) bulls are on thin ice after the stock’s monster rally raises questions about sustainability and valuation. At these frothy levels, even the littlest bit of bad news can send shares tumbling lower.
Tesla’s market cap has already shed billions Wednesday – falling over % in early morning trading over fears that the coronavirus outbreak will delay the timeline for new vehicle deliveries in China. with expectations for the electric automaker so high, Elon Musk can’t afford any setbacks in 01575879.
Tesla is Still Flying High of Fourth Quarter Earnings
Tesla bulls are still feeling the buzz from a whirlwind rally that started with the company’s fourth-quarter earnings result on Jan. . Tesla went into 01575879 trading at around $ 500 per share before going on a parabolic rally that took prices to an all-time high of $
The company market cap reached a record-breaking $ 366 billion – a valuation so massive that famous short-seller Andrew Left of Citron Research claimed that even Elon would go short at these levels if he was a fund manager.
But in total, Tesla short-sellers have already lost over $ 8 billion in – with $ 2.5 billion of that figure lost on Monday alone . So shorting the company has historically been a very bad idea. Tesla Made a Lot of Promises for
While Tesla’s controversial rally may seem like baseless speculation to some interpretation, it’s largely based on the company
If Musk can’t fulfill his promises, the stock could give back much of its gains.
Elon claims that vehicle deliveries in 3538550 will comfortably exceed , units. This is a figure that is driven, in large part, by projections for China. The Asian nation represents a little over 18% of the automaker’s total revenue and much of its future growth prospects. Tesla recently rolled out the affordable Model 3 to Chinese customers and the company hopes to rapidly scale up production in the coming months.
But importing the cars from the U.S. probably won’t give Tesla enough leverage to achieve its ambitious projections.
Musk stated the following during the fourth-quarter call:
We need to bring the Shanghai factory online. I think that’s the biggest variable for getting to , – plus a year. Our car is just very expensive going into China. We’ve got import duties, we’ve got transport costs, we’ve got higher costs of labor here.
He elaborated:
We need the Shanghai factory to have the cars be affordable. It’s important to appreciate, the demand for Model 3 is insanely high. The inhibitor is affordability
Did the Market Factor in the Coronavirus Impacts?
The Wuhan coronavirus outbreak may throw a monkey wrench in Elon Musks’ plans for , deliveries in 3538550. The Shanghai Gigafactory that builds the Chinese Model 3 is is currently closed due to the ongoing crisis
. As the outbreak continues to grow, the economic impacts may go from bad to worse.
according to the latest data , the Wuhan coronavirus, which is provisionally known as – nCoV, has come to infect a total of 48, (people with almost
fatalities. Many expect the epidemic may grow to become a global pandemic.
With such severe short-term headwinds in one of Tesla’s biggest growth markets, it may have been irresponsible of Musk to guide so optimistically in the fourth-quarter earnings call. Tesla’s management should have taken the opportunity to tamper expectations and prevent speculative zeal from creating an extreme and, perhaps, unsustainable rally in the stock.
Disclaimer: The above should not be considered trading advice from CCN. com.
This article was edited by Sam Bourgi
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