Apple and Tesla stocks have fallen on growing concerns about delays in their production lines in the chain.
Apple shares hit their lowest level since June 2021. Tesla stock has fallen 73% from record highs in November 2021.
Companies are struggling to continue production in China due to Covid restrictions and weeks of lockdown.
Now they face staff shortages as China battles a Covid wave after years of lifting restrictions.
China announced that it will lift its strict quarantine rules for travelers on January 8, a positive sign for many investors who are eyeing an easing of supply chain movements in 2023.
But global investors remain cautious ahead of additional interest rate hikes, a global economic slowdown and the ongoing war in Ukraine.
Given the rise in Covid cases in key manufacturing hubs, analysts say it will take time for production to pick up again.
“Factories will face labor shortages for at least 4-6 weeks as the tide passes through their production areas, and of course most migrant workers return to their home villages for the Lunar New Year at the end of January. Will,” says. Simon Baptiste, Chief Economist at The Economist Intelligence Unit.
“Production in China is unlikely to return to normal until the end of February.”
Earlier this year, Apple supplier Foxconn suffered production delays at its Zhangzhou plant, known as “iPhone City,” after unrest. The company said its revenue in November was down 11 percent from the same month in 2021.
This week, media reports said that Tesla’s Shanghai manufacturing plant has cut production after the outbreak of Covid infections in China. The company declined to comment.
But analysts say the company’s cheap sales are evident in the fact that it has offered discounts to both Chinese and North American customers.
Investors have also expressed concerns about Tesla Chief Executive Elon Musk, who has repeatedly made controversial headlines. He took over Twitter in October after a legal battle, and since then Mr Musk has focused much of his time running the social media platform. Some, meanwhile, have cited his alleged distraction as another reason for Tesla’s share price decline.
Last week, Mr. Musk tweeted asking users if he should continue as head of the platform — they voted no, and asked him to announce that he would step down once a replacement was found. will resign from
Analysts say it now needs to restore the confidence of investors and board members.
“Musk is seen as ‘asleep at the wheel’ from a leadership standpoint for Tesla as investors navigate this Category 5 storm,” Webush tech analyst Dan Ives wrote in his newsletter. A CEO is needed for that.
“Instead Musk is laser-focused on Twitter, which has been a constant nightmare for investors that never ends.”
