Tesla shares slide on delivery fears as Apple’s value dips below $2tn

Tesla shares tumbled on the first day of trading in 2023 after the group’s new vehicle deliveries fell short of Wall Street expectations, while the US tech rout also pushed Apple’s market capitalisation $1tn below its peak.

Fears that the electric carmaker faces a slowdown in demand sent Tesla shares down 12.2 per cent on Tuesday. Apple’s market value fell below $2tn — a stark reversal from the first trading day of 2022, when it became the only company to reach a $3tn valuation.

The tech sector has been hit by investors’ concerns about looming recession, persistently high inflation and rising interest rates, as well as severe disruption to supply chains because of Covid in China.

Recent months have been chaotic for Apple, which in November said it was experiencing “significant” disruptions in the assembly of high-end iPhones, following an outbreak of Covid-19 at a megafactory in Zhengzhou, which is run by Foxconn, its biggest assembler.

Tom Forte, an analyst at DA Davidson & Co, said the Covid outbreak in China was “the biggest wild card” for Apple’s results in 2023.

Manufacturing problems in China and the uncertain economic outlook in the US have also raised concerns about Tesla’s prospects.

Like Apple, the carmaker struggled with production and logistics challenges in 2022, including the closure of its largest production plant in Shanghai early in the year.

Chief executive Elon Musk warned last month of “stormy weather ahead” as higher interest rates weighed on demand.

Tesla said on Monday that it delivered 405,278 vehicles in the three months to the end of December, an 11 per cent increase from the record it hit in the preceding quarter. Most analysts had expected deliveries to reach between 420,000 and 430,000.

Daniel Ives, an analyst at Wedbush, said the “Cinderella ride” was over for Tesla, adding that Musk needed to steer the company through a “dark macro storm” instead of focusing on Twitter, his new purchase, “which remains a distraction”.

The disappointment over the fourth-quarter shortfall came despite Tesla’s new plants in Berlin and Texas continuing to increase production.

Apple was the first publicly listed company to reach $1tn in market value in August 2018 and it attained $3tn last year. There are now no tech companies worth more than $2tn, but Apple is the largest, followed by Microsoft at $1.8tn.

The iPhone maker’s business performed strongly during the coronavirus pandemic and in the 12 months to September it posted a record $394bn of revenue and nearly $100bn in net profit.

According to Counterpoint Research, the company shipped just 14 per cent of all smartphones globally in the first nine months of the year, but it accounted for 43 per cent of all revenues and 82 per cent of all profits — its highest profit share since 2015.

However, recent months have been chaotic for the tech giant and the threat to its production has grown after Beijing loosened its strict Covid restrictions and cases in the country began soaring.