For the second trading day in a row, Tesla (TSLA -1.47%) stock drove lower on Monday, down 3.7% as of 10:50 a.m. ET.
You can blame China for that.
Tesla's problems in China began about a month ago, when a resurgent coronavirus forced the local government to declare a quarantine in Shanghai, where Tesla's Chinese gigafactory is located. In cooperation with the quarantine, Tesla shut down production at its Shanghai plant, then reopened, then shut down again at the end of the month.
That second shutdown has now continued for more than two straight weeks, as Reuters confirms today. As a result of the shutdown, Tesla ended up with basically flat production numbers between February and March, and March's tally of 55,462 electric cars assembled was down 18.5% from January's 68,117.
Now here's why this is important to Tesla investors -- and why it may provide a glimpse of what may happen next.
According to Reuters, "Chinese buyers have rushed to place orders, worried that Tesla may raise prices further after announcing price hikes in November and March due to the higher costs of raw materials." So if and when the Shanghai plant opens back up, you can expect backlogged orders to quickly be filled, producing a boom in Tesla production and deliveries -- perhaps as early as this later this month.
However, if buyers are largely buying in order to front-run anticipated price hikes, then those orders, that production, and those deliveries will most likely pull forward sales of electric cars that would otherwise have happened in May or later.
Result: You can expect to see Tesla's Chinese numbers improve once the Shanghai lockdowns go away -- but then probably fall again shortly afterward. This is going to make it hard for longer-term investors to discern any particular trend in Tesla's China sales.
As always, caveat investor.