The stock prices of Apple and Tesla have fallen as mounting fears about delays in their production lines in China have been circulating.
Apple’s stock price dropped to a level not seen since June 2021. Since reaching a new all-time high in November 2021, Tesla’s share price has fallen by 73%.
Because of the limits imposed by COVID and the weekslong lockdowns, businesses have had a difficult time maintaining manufacturing in China.
Now that years of prohibitions have been lifted, China is battling a COVID tsunami, and they are suffering a manpower bottleneck as a result.
On January 8, China announced that it would relax its stringent quarantine requirements for travelers. This is a promising sign for many investors who anticipate an easing of restrictions on the transit of supply chain goods in 2023.
However, international investors are exercising extreme caution in anticipation of future increases in interest rates, a downturn in economic growth around the world, and the continuation of hostilities in Ukraine.
An increase in the number of instances of COVID in key industrial centres has led analysts to predict that it would take some time for production to once again begin to ramp up.
“Factories are going to experience labour shortages for at least 4-6 weeks as the wave passes through their production regions,” says Simon Baptist, chief economist at The Economist Intelligence Unit. “Of course, the majority of migrant workers will go back to their home villages for the Lunar New Year at the end of January,” says Baptist. “Factories are going to experience labour shortages for at least 4-6 weeks as the wave passes through their production regions.”
It does not appear that production will return to normal in China before the end of February at the earliest.
In the beginning of this year, Apple supplier Foxconn experienced production delays as a result of instability at its Zhangzhou plant, sometimes known as “iPhone City.” The company reported that its revenue for the month of November was 11% lower than it was for the same month in 2021.
This week, various news outlets reported that Tesla’s manufacturing unit in Shanghai had reduced output due to an increase in the number of COVID infections in China. The corporation does not wish to comment on the matter.
The fact that the corporation is discounting its products to clients in both China and North America, according to industry observers, is evidence that the company’s sales are struggling.
Concerns have also been voiced by investors regarding Elon Musk, the chief executive officer of Tesla, who has been in the news for making controversial headlines on multiple occasions. After a protracted legal battle, he was finally able to take control of Twitter in October, and ever since then, Mr. Musk has devoted a large portion of his time to managing the online social media network. A number of people have suggested that the dip in Tesla’s share price is also due to the fact that he was allegedly distracted at this time.
The previous week, Mr. Musk sent out a tweet in which he posed the question to users of the platform as to whether or not he should continue in his role as the leader of the organization. The users responded with a negative vote, which prompted Mr. Musk to reveal that he would step down from his position once a successor was found.
According to the analysts, he must now work to regain the faith of the board members and investors.
“Musk is viewed as “asleep at the wheel” from a leadership perspective for Tesla at a time when investors need a CEO to navigate this Category 5 storm,” Webush tech analyst Dan Ives wrote in his newsletter. “Asleep at the Wheel” refers to a situation in which a person is asleep while operating a vehicle or machinery.
Instead, Musk is “laser-focused” on Twitter, which has been a continuing nightmare for investors that will never end.