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Why Is Tesla Stock Suddenly Crashing Today? – CCN.com

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5 years ago

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  • Tesla has shed over 10% 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 500,000 vehicle deliveries in 2020.
  • 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 $968.

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 10% 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 2020.

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. 30. Tesla went into 2020 trading at around $430 per share before going on a parabolic rally that took prices to an all-time high of $968.

Source: YCharts

The company’s market cap reached a record-breaking $160 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.

Source: Twitter.com

But in total, Tesla short-sellers have already lost over $8 billion in 2020 – 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 2020

While Tesla’s controversial rally may seem like baseless speculation to some observers, it’s largely based on the company’s guidance for the full year 2020. If Musk can’t fulfill his promises, the stock could give back much of its gains.

Elon claims that vehicle deliveries in 2020 will comfortably exceed 500,000 units. This is a figure that is driven, in large part, by projections for China. The Asian nation represents a little over 10% 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 500,000-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 500,000 deliveries in 2020. The Shanghai Gigafactory that builds the Chinese Model 3 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 2019-nCoV, has come to infect a total of 24,607 people with almost 500 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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Carry On Canadian Business. Carry On!

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1 day ago

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October 22, 2024

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Human Resources Officers must be very busy these days what with the general turnover of employees in our retail and business sectors. It is hard enough to find skilled people let alone potential employees willing to be trained. Then after the training, a few weeks go by then they come to you and ask for a raise. You refuse as there simply is no excess money in the budget and away they fly to wherever they come from, trained but not willing to put in the time to achieve that wanted raise.

I have had potentials come in and we give them a test to see if they do indeed know how to weld, polish or work with wood. 2-10 we hire, and one of those is gone in a week or two. Ask that they want overtime, and their laughter leaving the building is loud and unsettling. Housing starts are doing well but way behind because those trades needed to finish a project simply don’t come to the site, with delay after delay. Some people’s attitudes are just too funny. A recent graduate from a Ivy League university came in for an interview. The position was mid-management potential, but when we told them a three month period was needed and then they would make the big bucks they disappeared as fast as they arrived.

Government agencies are really no help, sending us people unsuited or unwilling to carry out the jobs we offer. Handing money over to staffing firms whose referrals are weak and ineffectual. Perhaps with the Fall and Winter upon us, these folks will have to find work and stop playing on the golf course or cottaging away. Tried to hire new arrivals in Canada but it is truly difficult to find someone who has a real identity card and is approved to live and work here. Who do we hire? Several years ago my father’s firm was rocking and rolling with all sorts of work. It was a summer day when the immigration officers arrived and 30+ employees hit the bricks almost immediately. The investigation that followed had threats of fines thrown at us by the officials. Good thing we kept excellent records, photos and digital copies. We had to prove the illegal documents given to us were as good as the real McCoy.

Restauranteurs, builders, manufacturers, finishers, trades-based firms, and warehousing are all suspect in hiring illegals, yet that becomes secondary as Toronto increases its minimum wage again bringing our payroll up another $120,000. Survival in Canada’s financial and business sectors is questionable for many. Good luck Chuck!. at least your carbon tax refund check should be arriving soon.

Steven Kaszab
Bradford, Ontario
skaszab@yahoo.ca

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Imperial to cut prices in NWT community after low river prevented resupply by barges

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October 22, 2024

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NORMAN WELLS, N.W.T. – Imperial Oil says it will temporarily reduce its fuel prices in a Northwest Territories community that has seen costs skyrocket due to low water on the Mackenzie River forcing the cancellation of the summer barge resupply season.

Imperial says in a Facebook post it will cut the air transportation portion that’s included in its wholesale price in Norman Wells for diesel fuel, or heating oil, from $3.38 per litre to $1.69 per litre, starting Tuesday.

The air transportation increase, it further states, will be implemented over a longer period.

It says Imperial is closely monitoring how much fuel needs to be airlifted to the Norman Wells area to prevent runouts until the winter road season begins and supplies can be replenished.

Gasoline and heating fuel prices approached $5 a litre at the start of this month.

Norman Wells’ town council declared a local emergency on humanitarian grounds last week as some of its 700 residents said they were facing monthly fuel bills coming to more than $5,000.

“The wholesale price increase that Imperial has applied is strictly to cover the air transportation costs. There is no Imperial profit margin included on the wholesale price. Imperial does not set prices at the retail level,” Imperial’s statement on Monday said.

The statement further said Imperial is working closely with the Northwest Territories government on ways to help residents in the near term.

“Imperial Oil’s decision to lower the price of home heating fuel offers immediate relief to residents facing financial pressures. This step reflects a swift response by Imperial Oil to discussions with the GNWT and will help ease short-term financial burdens on residents,” Caroline Wawzonek, Deputy Premier and Minister of Finance and Infrastructure, said in a news release Monday.

Wawzonek also noted the Territories government has supported the community with implementation of a fund supporting businesses and communities impacted by barge cancellations. She said there have also been increases to the Senior Home Heating Subsidy in Norman Wells, and continued support for heating costs for eligible Income Assistance recipients.

Additionally, she said the government has donated $150,000 to the Norman Wells food bank.

In its declaration of a state of emergency, the town said the mayor and council recognized the recent hike in fuel prices has strained household budgets, raised transportation costs, and affected local businesses.

It added that for the next three months, water and sewer service fees will be waived for all residents and businesses.

This report by The Canadian Press was first published Oct. 21, 2024.

The Canadian Press. All rights reserved.

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U.S. vote has Canadian business leaders worried about protectionist policies: KPMG

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October 22, 2024

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TORONTO – A new report says many Canadian business leaders are worried about economic uncertainties related to the looming U.S. election.

The survey by KPMG in Canada of 735 small- and medium-sized businesses says 87 per cent fear the Canadian economy could become “collateral damage” from American protectionist policies that lead to less favourable trade deals and increased tariffs

It says that due to those concerns, 85 per cent of business leaders in Canada polled are reviewing their business strategies to prepare for a change in leadership.

The concerns are primarily being felt by larger Canadian companies and sectors that are highly integrated with the U.S. economy, such as manufacturing, automotive, transportation and warehousing, energy and natural resources, as well as technology, media and telecommunications.

Shaira Nanji, a KPMG Law partner in its tax practice, says the prospect of further changes to economic and trade policies in the U.S. means some Canadian firms will need to look for ways to mitigate added costs and take advantage of potential trade relief provisions to remain competitive.

Both presidential candidates have campaigned on protectionist policies that could cause uncertainty for Canadian trade, and whoever takes the White House will be in charge during the review of the United States-Mexico-Canada Agreement in 2026.

This report by The Canadian Press was first published Oct. 22, 2024.

The Canadian Press. All rights reserved.

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