Tesla shares extend losses amid concerns about demand in China

Dec. 27 (Reuters) – Tesla Inc (TSLA.O) Shares fell 11.4% on Tuesday after a Reuters report that Tesla plans to run a reduced production schedule in January at its Shanghai plant raised fears of falling demand in the world’s largest auto market.

The stock, which fell to its lowest in more than two years and had its worst day in eight months, was the biggest draw on the benchmark S&P 500. (.SPX) and the high-tech Nasdaq index (nineteenth).

It has lost more than half its value since the beginning of October as investors worried that Twitter was taking up too much of CEO Elon Musk’s time while he worried about selling his stake in the electric car maker.

The world’s most valuable automaker’s production cuts at its Shanghai plant come amid a rising number of COVID-19 infections in the country.

“There is no doubt that there are concerns about demand,” said Thomas Hayes, chairman of Great Hill Capital, citing lower delivery expectations from Chinese rival Nio Inc. (9866.HK)in the main market.

Hayes also added that Tesla shares were facing a “perfect storm” of rising interest rates, tax-loss selling and stock sales by some of the funds that own a significant amount of Tesla stock.

A tax loss sale is when an investor sells an asset at a capital loss to reduce or eliminate the capital gains realized through other investments, for income tax purposes.

Meanwhile, a Reuters analysis showed that the prices of used Tesla cars were falling faster than those of other automakers, which affected the demand for the company’s new cars that rolled off the assembly line.

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Reporting by Akash Sriram in Bengaluru; Editing by Anil D’Silva

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