Don’t look now but Tesla is jumping again.
Shares of Tesla climbed as much as 9% in premarket trading on Monday, back above the $800 level it hit amid last week’s wild swing. Part of the reason appears to be positive news from China, after the Shanghai municipal government said it would help companies like Tesla “resume production as soon as possible,” according to Reuters. Tesla’s Shanghai factory has been closed as the Chinese government looks to contain the coronavirus epidemic that has killed more than 900 people.
The stock looks likely to continue its wild speculative trading, as the Shanghai announcement came out Friday evening but shares gained steam in early Monday trading.
Overall stock market futures pared their losses after Chinese President Xi Jinping said he would adopt more decisive measures to curb the spread of the coronavirus.
Tesla had a crazy week last week, jumping double digits on Monday and Tuesday and then falling 17% on Wednesday.
The trading is being driven by speculation and a so-called short squeeze, detaching shares from the company’s fundamentals, analysts said. The stock reached as high as $968.99 last week.
Last week Tesla’s China vice president Tao Lin announced online that that car deliveries to customers would be delayed due to the spread of the coronavirus. Lin said the early February deliveries would be delayed, since the company “will catch up the production line once the outbreak situation gets better,” but that production would restart on Monday.
Additionally, Tesla temporarily closed its stores in mainland China – a key market for the company. Tesla warned during its quarterly conference call in January that coronavirus issues would dent the next quarter’s profitability slightly, although Barclays is skeptical of that explanation.
“We wonder to what extent the company will use the disruption as an opportunity to set up a better 2Q print,” Barclays said in a note to investors on Monday.
