Tesla and Apple stock prices have plummeted due to growing concerns over delays in China’s production lines.
Apple shares have fallen to their lowest level since June 2021. Tesla stock dropped 73% after reaching a record high in November 2021.
Covid restrictions and weeks-long lockdowns have made it difficult for companies to continue production in China.
They now face a staffing crisis as China fights the Covid wave, which has been triggered by years of restrictions.
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China has announced that it will remove its strict quarantine rules for travellers in January. This is a positive sign, according to many investors who see an increase in supply chain movement by 2023.
Global investors are being cautious in the face of possible interest rate increases, a slowdown in global economic growth and the ongoing conflict in Ukraine.
Analysts believe that production will need to increase again due to the recent spike in Covid cases in key manufacturing centers.
Simon Baptist, the chief economist at The Economist Intelligence Unit, says that factories will experience labour shortages for at most 4-6 weeks as the wave passes through the regions they produce. And of course, most migrant workers are going back to their villages during the Lunar New Year.
“Production in China is unlikely to return to normal until February,”
After unrest at the “iPhone City” plant in Zhangzhou, production delays were experienced by Foxconn, an Apple supplier. According to the company, November’s revenue was 11% lower than that of 2021.
Media reported this week that Tesla’s Shanghai plant had stopped production due to rising Covid infections in China. The company declined to comment.
Analysts say that the company’s slow sales are evident by the fact it offers discounts to both North American and Chinese customers.
Concerns have been raised by investors about Tesla chief executive Elon Musk. He has made headlines numerous times. After a lengthy legal battle, Musk took control of Twitter in October. Since then, Musk has spent a lot of his time running the social media platform. His alleged distraction during this period has been cited as another reason for Tesla’s fall in share price.
Last week, Musk tweeted to ask users if they wanted him to continue as head of the platform. They voted no. He then announced that he would resign once a replacement has been found.
Analysts believe he must now rebuild investor confidence and the trust of board members.
In his newsletter, Dan Ives, a Webush tech analyst wrote that Musk is seen as “asleep behind the wheel” from Tesla’s leadership perspective. This is because investors are looking for a CEO to guide them through this Category 5 storm.
Musk instead is laser-focused on Twitter, which has been an ongoing nightmare for investors that never ends.
