Shares of Tesla (TSLA) - Get Report made a rare U-turn on Wednesday after the electric automaker said that some of its cars scheduled for February delivery in China will be delayed due to the coronavirus outbreak, which has kept its Shanghai plant shuttered for nearly two weeks.
Tesla shares fell 18.84% to $719.95 on Wednesday after a company executive confirmed that expected deliveries of the electric vehicle company's Model 3 sedans will be delayed as Tesla’s Shanghai factory remains closed following the Chinese Lunar New Year.
"The proposed delivery (of cars) in early February will be delayed,” Tao Lin, vice president at Tesla, said on the Chinese microblogging service Weibo. “We will catch up the production line once the outbreak situation gets better.”
The electric carmaker began rolling out Model 3 vehicles from its Shanghai Gigafactory to Chinese customers in January.
Shares of Tesla soared more than 36% over the past two sessions, and had rocketed nearly 60% through Tuesday on the back of strong earnings and expectations of more to come.
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Tesla surged almost 20% on Monday alone, pushing its market value close to $141 billion, after Panasonic said it turned profitable in the final quarter of 2019, a full quarter ahead of expectations, thanks to battery sales to Tesla.
Tesla is now well ahead of fellow domestic carmakers Ford (F) - Get Report and General Motors (GM) - Get Report in terms of market cap, with Toyota (TM) - Get Report well within its sights. Yet Toyota sold 10.74 million cars in 2019 compared to 367,500 for Tesla.
Analysts recently have been raising price targets to catch up to the stock and short-covering by investors betting against the shares. The average 12-month price target of analysts is now $493, up from $334 in December, according to FactSet.
However, Jed Dorsheimer with Canaccord Genuity took a different road on Wednesday, telling clients in a research note that his team is "taking our foot off the accelerator" and downgrading the stock to hold from buy in part because of the stock's run-up but also because of concerns about the impact of the coronavirus.
"Just as we observed a clear buy signal coming into 2020, we see the risk of China's
coronavirus as a clear headwind to the Shanghai facility, suggesting a more pragmatic position," said Dorsheimer.
He reiterated his $750 stock price target, however.