Faithful investors in Tesla (TSLA) for more than a decade are starting to worry about weak fundamentals in play. The electric vehicle leader started its terrifying decline on Dec. 28, 2023, at $263.24. Shares plunged to $183.44 when the firm posted quarterly results.
Tesla cut prices to sustain demand. On Wed., shares fell by 4.54% to close at $169.48. Shares lost $77 billion in value on March 6. The firm reported a 19% slump in EV shipments in China, or 60,365 shipments. China’s severe economic downturn is worsening. China’s fall is driven primarily by its three-year lockdown ending in late 2022 and its wolf warrior diplomacy.
Markets may realize that China’s problems could hurt revenue for other major U.S. firms. This includes Starbucks (SBUX), McDonald’s (MCD), and Apple (AAPL). Counterintuitively, Meta Platforms (META) and Alphabet (GOOG) are benefiting greatly from China’s domestic economic weakness. Alibaba (BABA) and PDD (PDD) are among the retail firms advertising heavily on Google’s search site and Meta’s Instagram and Facebook sites.
Nvidia (NVDA) skirted U.S. sanctions and sold a high volume of graphics processors to Chinese technology firms. AMD (AMD) tried to sell GPU chips to China but the U.S. stopped its attempts. Intel (INTC) and other chip firms reportedly sold billions of dollars worth of products to China. Risks are on the rise that the government will investigate those rumors and stop future imports.
The ongoing trade restrictions could cause a panic crash for AI chip stocks and some of the magnificent seven firms.
