Future Tech
Tesla's China woes point to pain for stocks
Tesla is the worst S&P 500 performer ahead of the bell, set to extend its longest losing streak in years on news of production troubles in China. That is a bad sign not just for the index's performance on Tuesday, but also for US companies hoping for a quick return of pre-pandemic Chinese consumption and production patterns.
Tesla's problems are not new. It has been grappling with slowing demand and production troubles in China for a while (earlier this month it was reported to have suspended output at its Shanghai factory). In October, the electric-vehicle maker lowered prices there as competitive and economic pressures intensified. Revenue from China accounted for 24% of Tesla's total in the most recent quarter.
Other US companies depend on sales in China for large chunks for revenue as well, including Apple (17% last quarter), Nike (13%), and Nio (also slumping on news today due to China-related issues). Apple's production issues there are a concern.
A miss for Nike's sales in China marred its recent quarter as it experienced significant disruption due to Covid-19 lockdowns.
Reopening could usher in a boom, but, as my colleague Tatiana Darie wrote earlier, challenges loom.
- Bloomberg
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