Tesla's Stock to Hit Harder after Shanghai Factory Closure Due to Virus Outbreak

The coronavirus outbreak is all the reason of concern for business owners as it has led the country that is world’s biggest manufacturing hub towards shut down. A number of companies including Tesla has been asked by the Chinese government to shut their China factory. This may perhaps hit the stock of Tesla a bit hard in near future because company has been making big moves in China that will include delay in the production of their new model in Shanghai factory that can backfire by impacting Tesla’s fist quarterly results. Also, since past few weeks stock was continuously been on a parabolic rise and thus was considered over-valued followed by an expectation of correction.

Tesla initiated delivering its first cars produced in its Shanghai factory by the end of December 2019. The deliveries were indicative of a vital milestone for Tesla with hopes of gaining foothold in China using its Shanghai factory. The temporary closure of this factory is considered a big hit to Tesla as China is the world’s leading electric vehicles market across the globe and the local factory was introduced with the aim of speeding up deliveries within the country amid of ongoing US-China trade war.

However, the coronavirus outbreak had capabilities more than that of trade war to throw a wrench over Tesla’s plans. The crisis started in Wuhan at the first week of December and has till now infected hundreds of people in almost a dozen of countries with more than 170 already dead in China. The World Health Organization (WHO) had recently stated that this is very early to declare a global public health emergency, even though the outbreak has become a major heath emergency in China. Nevertheless, Chinese government has restricted companies for resuming their operations until next week.

However, Tesla isn’t the only big company that has been disrupted due to the virus outbreak. Internet giant Google is also shutting down all it operation in China temporarily, followed by Apple & Facebook who also have restricted their employees to travel for a few days.