Tesla's wild ride to the heights over the past two days came to an abrupt halt Wednesday when its stock lost 18.7% of its value over delivery delay fears in China caused by the raging Novel coronavirus (2019-nCoV) outbreak.
The company's stock plunged 18.7% to end Wednesday's trading at $721.08. It hit an intraday high of $845.98 and plunged to a low of $704.11. The stock opened at $823.26.
The massive sell-off follows two straight days of head-spinning gains that saw the stock skyrocket by nearly 35%. Tesla shares leapt nearly 20% on Monday and by 13.7% on Tuesday. The Monday boost was the stock's biggest one-day jump since May 2013.
Tuesday's closing price of $887.06 is a record high for the stock. The stock jumped by much as 23% Tuesday, hitting an intraday record of $968.99 per share. Tesla ended Tuesday with a market cap of $159.9 billion. Tesla's soaring stock has risen 400 percent since June 2019.
If Tesla's stock drops more than 19.3% on Wednesday, it will exceed its largest single-day loss attained in 2012. This will be its worst day on record. Tesla shares closed up 13.7% Tuesday, at $887.06, a record high for the stock.
The sudden Wall Street sell-off of Tesla's stock was triggered by a statement from a Tesla executive at the company's Gigafactory Shanghai, who said Tesla electric vehicles (EVs) initially scheduled for delivery in early February will be delayed due to the 2019-nCoV outbreak.
"The proposed delivery (of cars) in early February will be delayed," said Tao Lin, vice president of Tesla Global, in a statement posted on Chinese microblogging service Weibo. "We will catch up the production line once the outbreak situation gets better."
Lin's statement echoes that of Tesla CFO Zach Kirkhorn who said during the company's earnings call last week Tesla expects "a one- to one-and-a-half-week delay in the ramp of Shanghai-built Model 3 due to a government-required factory shutdown" related to the raging coronavirus outbreak.
"This may slightly impact profitability for the quarter, but is limited, as the profit contribution from Model 3 Shanghai remains in the early stages," he said. "We are also closely monitoring whether there will be interruptions in the supply chain for cars built in Fremont," but Tesla so far is not aware of anything material.
Tesla started assembling its Model 3 all-electric sedans from its Giga Shanghai in January. It kept Giga Shanghai closed after the Lunar New Year started on January 25 following government guidelines due to the outbreak of the new coronavirus.
As of Thursday morning, Hong Kong time, 2019-nCoV has killed 492 persons (all but two of them in China) and infected 24,648 others. China's National Health Commission (NHC) reports 911 persons have recovered from the coronavirus.
Giga Shanghai can currently assemble 3,000 Model 3s per week and attain an annual production rate of 150,000 EVs. This number will include the new Model Y electric compact crossover utility vehicle (CUV) slated to begin production in a few months. Analysts said the recently announced production delays at Giga Shanghai will likely hold back production of locally-made Model 3s and the Model Y.
Despite the production setbacks, Tesla said it doesn't expect a big financial hit in China due to the coronavirus outbreak. This is because the MIC (Made in China) Model 3 only represents a small fraction of the company's quarterly profits.
