Tesla last week said it expected a delay of up to a week and a half in the ramp-up of Model 3 production at the plant after the government ordered it to shut the factory due to the outbreak.
The coronavirus has disrupted business across China, with the government there saying another 65 people had died as of Tuesday, the highest daily total yet.
“Given the 3,000 per week China Model 3 production expectations in a country that remains on lockdown, we feel a reset of expectations in Q1 is likely and thus needs to be reflected in the valuation,” Canaccord analyst Jed Dorsheimer wrote in a report, leaving his price target unchanged at $US750 per share.
In mid-afternoon trade, the stock was 19 per cent lower at $US716.39.
Tesla’s rally of over 300 per cent since early June has been a vindication for Musk, who has transformed a niche car maker with production problems into the global leader in electric vehicles, with US and Chinese factories.
Still, many investors remain skeptical that Tesla can consistently deliver profit, cash flow and growth in the face of competition from established rivals including BMW and Volkswagen. Even many Tesla bulls question the stock’s valuation following its recent, electrifying surge.
Following Canaccord’s downgrade, nine analysts recommend buying Tesla’s stock, while 11 analysts are neutral and 15 analysts recommend selling, according to Refinitiv.
The median price target of analysts is $US390.