Will Tesla, Inc. endure the COVID-19 pandemic? Here is our analysis.
Tesla Stock Hit Since COVID-19
Tesla, Inc. has seen the value of its stock plummet since the COVID-19 (Corona Virus) struck the global community. NASDAQ lists the high point for Tesla’s stock price as $968.99. As this story is written, the value of a share has dropped by about 62% to $361. By comparison, the Dow Jones Industrial Average has dropped by about 34%. The S&P 500 has dropped by 31%. Tesla’s stock value impact seems to be much more severe than the impact on these indexes.
Trouble Ahead – Tesla Told To Close Fremont Factory
An Alameda County Health Order issued today instructs Tesla to cease vehicle production at its Fremont Factory and only handle basic operations such as payroll processing. The San Francisco Bay Area has been extremely hard hit by the newest social distancing regulations. Eight-million Californians are presently under a shelter in place order. On March 6th, Elon Musk Tweeted “The Coronavirus panic is dumb.” As of this article’s publication date, ten deaths have been attributed to COVID-19 in the Bay Area. Whether Elon Musk is correct or incorrect about the panic being dumb, his factory is being closed by local officials. Musk’s latest tweet on the topic is form March 16th, in which he stated, “That said, danger of panic still far exceeds danger of corona imo. If we over-allocate medical resources to corona, it will come at expense of treating other illnesses.”
Tesla Without Future Revenue
Tesla has had a long history of struggling to maintain profitability. Founded in 2003 by Martin Eberhard and Marc Tarpenning, Tesla Motors was later consolidated into Tesla Inc. The company has struggled to show a profit and only recently began to see the tide turn which boosted its stock value dramatically. Without revenue from its vehicle sales, Tesla will not turn a profit.
Tesla Without Current Revenue
Along with Tesla’s main U.S. vehicle manufacturing facility being closed to vehicle production, Tesla’s stores will also be closing in its top market of California. These may be followed by closures in other key markets. Without stores to help deliver vehicles, Tesla will suffer immediately revenue problems. The single Tesla store in Dedham Mass. serves as the delivery operations for Tesla's sales in seven states.
Torque News reached out to Tesla's press contact and asked these questions an offered this invitation:
- What steps has Tesla taken to protect employees?
- How will Tesla ride out the rough period ahead?
- Any positive comment on the state of affairs welcome.
Tesla has a reputation for ignoring media requests for comment, so we don’t expect an answer. If one comes, we will update this story. What do you think the future holds for Tesla in the coming six to twelve months? Tell us in the comments below.
Chart courtesy of NASDAQ and Google
The author is not a stock analyst. John Goreham is a life-long car nut and recovering engineer. John's focus areas are technology, safety, and green vehicles. In the 1990s, he was part of a team that built a solar-electric vehicle from scratch. His was the role of battery thermal control designer. For 20 years he applied his engineering and sales talents in the high tech world and published numerous articles in technical journals such as Chemical Processing Magazine. In 2008 he retired from that career and dedicated himself to chasing his dream of being an auto writer. In addition to Torque News, John's work has appeared in print in dozens of American newspapers and he provides reviews to many vehicle shopping sites. You can follow John on Twitter, and view his credentials at Linkedin.