Shares of Apple and Tesla declined on growing concerns about delays in their production lines in China.
Apple shares have reached their lowest level since June 2021. Tesla's stock has fallen 73% from its record high in November 2021.
Companies in China have struggled to keep production running due to Covid restrictions and weeks of lockdown.
Now they are facing a shortage of staff as China battles the Covid wave after years of lifting restrictions.
China announced it would lift its strict quarantine rules for travelers on January 8, a positive sign for many investors who are looking to ease supply chain movement in 2023.
But global investors are also becoming cautious ahead of additional interest rate hikes, a global economic slowdown and the ongoing war in Ukraine.
Given the spurt in Covid cases in major manufacturing hubs, analysts say it will take time for production to pick up again.
“Factories are going to experience labor shortage for at least 4-6 weeks as the wave passes through their production areas, and of course most migrant workers will return to their home villages for the Lunar New Year in late January Will go back," says Simon Baptiste, chief economist at The Economist Intelligence Unit.
"Production in China looks unlikely to return to normal until the end of February."
Production delays hit Apple supplier Foxconn after unrest at the Zhangzhou plant, known as "iPhone City", earlier this year. The company said its revenue was down 11% in November compared to the same month in 2021.
This week, media reports said Tesla's Shanghai manufacturing plant had cut production as Covid infections spiked in China. The company declined to comment.
But analysts say the company's sluggish sales are clear from the fact that it has offered discounts to both Chinese and North American customers.
Investors have also raised concerns about Tesla Chief Executive Elon Musk, who has repeatedly made controversial headlines. He took over Twitter in October after a protracted legal battle and since then, Mr Musk has focused a significant portion of his time on running the social media platform. Some have cited his perceived distraction during this time as another reason for the decline in Tesla's share price.
Last week, Mr Musk tweeted to users asking whether he should continue as head of the platform - he voted no, prompting him to announce he would resign from his position once a replacement was found. will give.
Analysts say he now needs to rebuild the confidence of investors and board members.
Webush tech analyst Dan Ives wrote in his newsletter, "Musk is seen as 'sleepy at the wheel' for Tesla from a leadership perspective at a time when investors need a CEO to navigate this Category 5 storm." it occurs."
"Instead Musk is laser-focused on Twitter which has been a never ending nightmare for investors."
Source link bbc
No comments:
Post a Comment