Tuesday Ticker: March 23, 2020

Toronto, Ontario —  In this week’s Tuesday Ticker, OEMs impact Axalta, Tesla skips the sick days and KAR Auction Services slips-up.

Reassessing Axalta

Auto coatings giant Axalta’s shares are trading at just half of their mid-February point. As of March 22, the market was prepared to pay less than $15 U.S. for the stock. On Valentine’s day, the stock sat just below the USD$30  point.

While the stock has rarely traded outside a USD$25-USD$35 window, the recent falls are attributable to the fall in auto manufacturers’ worth since the outbreak of the coronavirus. Axalta is heavily dependent on business from OEMs, with more than a third of its total sales from manufacturers. With the closure of many auto plants around the world, a key source of revenue has been significantly disrupted.

Tesla Fever
After a brutal week on the stock exchange, California-based Tesla has gotten itself in hot water. After California’s Governor implemented a state-wide order for the state’s citizens to shelter in place to prevent the spread of the coronavirus, Tesla chief Elon Musk said work would continue.

In emails, employees were told production would continue, but that workers could remain at home.

“I will personally be at work, but that’s just me. Totally OK if you want to stay home for any reason,” the famously mercurial Musk wrote to employees.

Investors were not entirely turned-off by Musk’s bravado. On Wednesday, Tesla stock sunk to a recent low-point of around $361 U.S. It closed out the week at about $427.50 U.S.

Recent investors have been the most hard-hit. Tesla stock reached its value zenith on February 18, when shares rose about $917 U.S. While the company’s value is less than half of its 2020 high, its current price is near the point it was at the beginning of the year–about $4.30 U.S.

KAR Before the Horse?

KAR Auction Services has seen a 65 percent drop in its share value over the past six months. In September, the stock was trading above $25 U.S. It now sits just above $12 U.S.

In 2019, the auto salvage wholesaler sold close to 3.5 million vehicles and generated $2.8 billion in sales. One of its brands, Adesa, owns more than 70 auction sites across North America.

While the lack of auto manufacturing parts coming from plants in Asia due to the coronavirus outbreak is expected to increase the price of auto salvage, which was already near record highs, investors may be concerned that KAR Auction Services is too reliant on international online business to realign its business in time to capitalize. The business has emphasized the importance of its online sales platform, through which 80 percent of its transactions now rely on. It says its customers use it from 80 countries.

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