Tesla Stock Price Halved; Will Production Suspension Extend the Selloff?
The Tesla (NASDAQ: TSLA) stock price lost more than half its value in the last month alone as slowing business activities and factory closures across the world on coronavirus fears weighed heavily on investor sentiment.
Although Tesla has resumed operations in its Shanghai factory, the company has fully or partially closed its other production facilities in Europe and the U.S.
The electric vehicle maker has announced the suspension of production at its factories in Fremont and New York. However, the company still plans to continue operations at its Gigafactory in Nevada.
Tesla claims they are in a strong cash position to face the uncertain environment. They had almost $6.3bn cash at the end of the latest quarter and the company recently raised $2.3bn of capital.
“We believe this level of liquidity is sufficient to successfully navigate an extended period of uncertainty. At the end of Q4 2019, we had available credit lines worth approximately $3B including working capital lines for all regions as well as financing for the expansion of our Shanghai factory,” notes the company.
The Tesla stock price is currently trading around $430, down close to 50% from an all-time high of $970 that it hit last month.
Wedbush Securities have reduced their Tesla price target to $425 from a previous target of $710, citing reduced levels of activity for Model 3 production in coming months as well as massive changes to demand trends around the world.
Wedbush Securities analyst Dan Ives believes Tesla is unlikely to hit its original +500K delivery targets for 2020.
The Tesla stock price has now erased all the gains that it had generated during the early 2020 bull-run.
On the positive side, some investors are seeing the drop in Tesla stock price as a buying opportunity for long-term investors; they claim the current environment is not a longer-term defining trend.