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Friday, March 24, 2023

Apple and Tesla: Tech stocks plummet on supply problems.

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Shares of Apple and Tesla have fallen amid growing concerns about production line delays in China. Apple’s stock hit its lowest level since June 2021. Tesla’s stock has fallen 73% from its November 2021 high. Companies are struggling to keep production in China amid coronavirus restrictions and weeks of lockdowns. Now they are facing staff shortages as they battle a Covid surge after China lifted years of conditions. But global investors are also wary of further rate hikes, a slowdown in the global economy, and the ongoing war in Ukraine. Analysts say it will take some time for production to recover as Covid cases surge at major manufacturing hubs.

Chief economist Simon Baptiste said, “Factories will face labor shortages for at least four to six weeks as the wave hits manufacturing regions. Of course, most migrant workers will be out of work during the Lunar New Year holiday in late January. I will head back to my home village,” he said. at the Economist Intelligence Unit. “Production in China is unlikely to return to normal until the end of February.” Earlier this year, Apple supplier Foxconn suffered production delays after riots at its Zhangzhou factory, known as “iPhone City.” According to the company, sales in November fell by 11% compared to the same month in 2021.

According to media reports this week, Tesla’s Shanghai factory has halted production due to a spike in coronavirus cases in China. The company declined to comment. However, analysts say the company’s sluggish sales are evident because it offered discounts to customers in both China and North America. Investors have also expressed concern about Tesla CEO Elon Musk, who has repeatedly made controversial headlines. He bought Twitter in October after a lengthy legal battle, and since then Mr. Musk has spent a good deal of his time running the social media platform, another reason why Tesla’s stock has fallen. Some have cited his alleged distractions during this period.

Musk asked users last week if he would remain in charge of the platform, but they voted against it, asking him to announce that he would step down once a replacement was found. Analysts say he needs to regain the confidence of investors and board members. “Musk is seen as ‘in the wheel’ in terms of Tesla’s leadership at a time when investors need a CEO to weather this Category 5 storm,” said Dan Welsh, a technology analyst. Ives wrote in his newsletter. “Instead, Musk is focused on Twitter, which is a never-ending nightmare for investors.”

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