Where next for Tesla shares amid deliveries slump and bitcoin hit

[MongiIG]

The Covid-induced China slowdown has hit Tesla deliveries and it's taken a $440 million write-down on its bitcoin purchase.

 

 

 Jeremy Naylor | Writer, London | Publication date: Monday 04 July 2022 

The slowdown in China as a result of the country's strong Covid lockdown measures has hit deliveries of electric carmaker, Tesla Inc which were already being revised down by auto analysts.

Additionally, Tesla has said that it will take a $440 million write-down on its $1.5 billion purchase of bitcoin in February 2021.

Video Transcript

Tesla's Q2 results

It's been a tough second quarter (Q2) for Tesla, with shortages of parts and pandemic-related production shutdowns at its plant in Shanghai causing a big drop in the electric carmaker's latest global deliveries.

Let's take a look at the numbers as we see them. Tesla reported that it delivered 254,000 vehicles in the second quarter. That is up 27% year-on-year (YoY).

The Chinese shutdowns brought Tesla its first back-to-back quarterly drop in deliveries in more than two years. This is well down on the 350,000 deliveries analysts were expecting, although some had already started to cut their expectations after chief executive, Elon Musk, had warned that the figure was likely to be roughly level with the first quarter (Q1), which came in at around 310,000 deliveries. So, this is a big disappointment.

Now much of what has happened has been because of what's been going on in China with its enforced Covid shutdowns, which have been on and off for much of the year so far, and what the company said were ongoing supply chain challenges in the factory - shutdowns beyond its control.

Tesla technical analysis

Let's take a look at the chart for Tesla.

There is no trade today because of the US holiday for Independence Day, despite the fact that IG has 24-hour markets trading, there is no all-sessions or stock trading at all on this Monday. So I'll have to wait until Tuesday to get a reaction to what's happening.

Adding to the carmaker's woes is the fact that it's also facing a $440 million write-down in its bitcoin holdings after a slump in the digital currency's value. Coming out of the weekend, we've got bitcoin down a further two thirds of 1%.

This vertical red line we have here on the left hand side of the chart is the point at which the company bought its exposure to the cryptocurrency market - $1.5 billion worth of bitcoin it bought back at that point.

But the carmakers' bet has turned into heavy loss-making in recent months as bitcoin crashed to that 18-month low.