Tesla’s stock fell 17% Wednesday, putting the brakes on a dramatic surge as a senior executive stated the coronavirus epidemic in China would postpone deliveries of its Model 3 cars, and analysts warned of its high valuation.
With Tesla still up over 25% since the firm posted its second consecutive quarterly revenue a week ago, Canaccord Genuity reduced its rating on Tesla to “hold” from “buy,” additional shrinking the already small number of analysts who recommend buying the stock.
Tesla VP Tao Lin stated on the Weibo social media platform that automotive deliveries from its new Shanghai plant would be temporarily delayed and that the corporate planned to restart production on February 10.
The $2 billion manufacturing facility is a vital part of Chief Executive Elon Musk’s plan to manufacture over half a million vehicles this year.
Needham analyst Rajvindra Gill, who recommends selling Tesla, warned in a report that Tesla’s stock is trading at extreme price-to-earnings multiples in comparison with many leading technology firms.
Even after Wednesday’s fall, Tesla is trading at about 55 times anticipated 2021 net income, in comparison with Apple at 22, Alphabet at 23, and Amazon at 49.
Tesla last week stated it expected a delay of up to a week and a half in the ramp-up of Model 3 production at the Shanghai manufacturing facility after the Chinese authorities ordered it to shut the plant due to the virus epidemic.