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Even coronavirus can't stop Tesla's surge

Carmaker closes Shanghai facility

Tesla CEO Elon Musk walks beside the new Tesla Model Y at its unveiling in Hawthorne, Calif., in March. (AFP via Getty I
Tesla CEO Elon Musk walks beside the new Tesla Model Y at its unveiling in Hawthorne, Calif., in March. (AFP via Getty Images/TNS)

It seems as if nothing can stop Tesla right now.

Not even the Chinese government, which has ordered Tesla to temporarily shut down its Shanghai Gigafactory due to fears about the spread of the coronavirus.

Tesla’s shares surged by more than 11 percent Thursday, to $645.09, as investors shrugged off the company saying it briefly would stop production of its Model 3 cars in Shanghai at the behest of Chinese officials.

Tesla Chief Financial Officer Zach Kirkhorn said on a conference call with industry analysts late Wednesday that the Shanghai plant shutdown will last into February, and might have some impact on the company’s profits in its current business quarter.

Kirkhorn said Tesla is expecting “a one to one-and-a-half week delay in the ramp of Shanghai built Model 3s due to a government required factory shutdown.”

Several Bay Area tech companies, including Apple, Intel and Facebook, either have restricted or canceled business travel to China as part of the effort to contain the coronavirus outbreak, which centers around the Chinese city of Wuhan.

Tim Bajarin, director to tech research company Creative Strategies, said the Gigafactory closure “needs to be watched closely as it could impact how many Teslas can be made in the short term.”

However, Bajarin also said that Tesla’s fourth-quarter results, and business outlook, appear strong enough to outweigh any major concerns that could arise from the brief production stoppage in Shanghai.

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“Tesla’s move to profitability is good news for investors and suggests that their most serious manufacturing problems may behind them,” Bajarin said.

At Wedbush Securities, analyst Dan Ives said he wasn’t worried about any major negative effects the closing of the Shanghai plant might have on Tesla’s overall business.

“Shutting down Giga 3 (the Shanghai Gigafactory) for a few weeks, given the coronavirus outbreak, is not moving the needle on the transformative China growth story for 2020,” Ives said.

“The headline is scarier than the true impact to Tesla in China for now.”

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