Tesla stock slides amid production slowdown in China, surging COVID cases
Yahoo Finance Live anchors Pras Subramanian and Seana Smith examine Tesla shares after EV production concerns arise from China.
Video Transcript
PRAS SUBRAMANIAN: Tesla shares sliding over 5% today, maybe at 7%, as the automaker heads towards its seventh straight day of losses for the first time since 2018. The latest issue here, Tesla reportedly extending its Christmas holiday shutdown in Shanghai by a day, telling workers there on Saturday to go home. Sources say Tesla is facing a wave of COVID infections that could-- and that could be why we're seeing that shutdown here today.
Also, a report-- Reuters reporting today that Tesla is shutting down in January for the Chinese New Year, leaving it only open for 17 days of production. Again, that's more than what they would normally be shutting down for, Seana. So I kind of got to say, this is more about the drumbeat of demand sort of demand falling is dripping. It's happening. It's every day here a news story about something going wrong in China for Tesla.
SEANA SMITH: Yeah, certainly. I think a lot of the losses, at least recently, tied to the demand worry, what that looks like heading into the new year. We know we can expect higher rates, which has clearly been a headwind for Tesla. A number of these growth oriented names, we're looking at losses over the last month alone of nearly 40%, the worst month that Tesla has seen on record.
A number of analysts have been starting to sound the alarm, just in terms of the concern that they have. Obviously, the distraction of Twitter, what that means for Elon Musk, the CEO of Tesla. Dan Ives was out with a new note today saying that the reality is after a Cinderella story demand environment, since 2018, Tesla is now facing serious macro and company specific EV competitive headwinds heading into the new year. He does go on to say that Musk is viewed as, quote, "asleep at the wheel" from a leadership perspective for Tesla.
At the time, investors need a CEO to navigate this category 5 storm. So I think a lot of investors are scratching their heads a little bit, just wondering what that demand picture is going to look like over the coming months, how quickly Tesla will be able to kind of right the ship because it has been a clearly challenging several months here for the company.
PRAS SUBRAMANIAN: Yeah, and it's really this double whammy of demand is sort of an issue here, right? Global markets sort of coming down a bit, right? Rates tightening, but then also the negative sentiment for Elon Musk, right? So people don't necessarily want to be seen in a Tesla supposedly is what people are saying. And you think about it there. There's a huge amount of replacement of cars having to go from gas power to EVs. That still needs to happen. And Tesla is really in the driver's seat for that. They are operating at a really remarkable level with their operations.
The question is, can they take off the spotlight from Elon Musk, who is sort of commanding that every day, this past weekend commenting on a Dmitry Medvedev tweet from the president of-- I believe president of Russia, talking about how these vast 2023 predictions is not really where he should be right now. He should be focusing more on the company. And that's what Dan Ives was talking about-- asleep at the wheel. We don't need a Ted striker. We want an actual captain there.
SEANA SMITH: Yeah, and Cowen was out with the recent note saying that there's a sense out there that the market share has peaked, concerns about overreliance on China. That's why we're seeing such a drop in the stock today following the fact that they could be cutting back on production. But then on the more bullish side, you're right. They are such a leader in this space. EVs are the future. Tesla clearly has a wide margin there just in terms of the success that they have already seen within that sector.
Canaccord was out with a more recent note, saying that they're more positive just in terms of the innovation that still continues to accelerate at the company. And that's in stark contrast to what we have seen at some of the other larger tech firms. And then they went on to say that, quote, "green shoots of recovery" may appear in the next year.
So even though we have seen significant losses for the stock this year, a number of analysts, Dan Ives also being one of them, still has an outperform rating on that stock because they are confident that the company is going to be able to recover some of those losses in 2023. We'll see.
PRAS SUBRAMANIAN: And we'll get the Inflation Reduction Act effect for them starting January 1st, so.
