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Shares of Tesla’s battery maker plunge after net profit slides

Shares of the world’s largest electric vehicle battery maker Contemporary Amperex Technology fell sharply on Thursday as investors reacted to disappointing results that revealed a big gamble on commodity prices.

The results come when China’s economy is struggling Prolonged locking of Covid-19Which slowed down production at Tesla, a leading customer at CATL, and as the Russo-Ukrainian war increased the cost of raw materials.

CATL shares fell 14% in morning trading as Chinese markets reopened after the working day break to 353 Rambam ($ 53), before reducing losses.

The fall came after CATL said last weekend that its net profit fell 24% in the first quarter of the year to $ 1.49 billion ($ 224 million) compared to the same quarter last year, with analysts’ expectations ranging from $ 2 billion to $ 8 billion, according to JPMorgan .

CATL also first recorded 1.8 billion yuan in “derivative financial liabilities” and hedging losses of 1.2 billion yuan.

“To address the risk of volatility in raw material prices, the company hedges nickel-related products,” CATL executives said in a company interview with analysts on Wednesday. “Overall, [hedging] There is a small impact on the company’s business. “

The price of nickel soared by 250% for two days in March to $ 100,000 per tonne, when a brutal brief blackmail took hold, stemming from fears of a shortage of supplies after Russia’s invasion of Ukraine. Russia is the world’s largest supplier of nickel for batteries.

The unprecedented rise in prices has forced the London Metal Exchange to do so Stop trading in nickel For a week and delete day-value trading.

The decision to cancel deals on the LME has angered traders who gambled on profits for nickel, but it has helped Chinese metal tycoon Xiang Guangda and his allies who have made a huge gamble that prices will go down.

CATL said its low profit was due in part to the price of raw materials, such as lithium carbonate, which rose more than expected, but analysts were not impressed with the company’s transparency about its results. “We believe the market was disappointed by the lack of details provided about the calls,” JPMorgan analysts said in a note.

Morgan Stanley cut CATL’s share price target from 378 yuan to 325 yuan by earnings news. “CATL has proven it is not immune to raw material prices,” bank analysts said. “And the lack of transparency can adversely affect sentiment and valuation.” Contact CATL for comment.

CATL is not the only company that has felt the pressure of rising raw material prices. This month, Tesla chief Elon Musk said the price of lithium, an important battery metal, has risen to “insane levels” and is a “basic limiting factor” for the adoption of electric vehicles.

The price of lithium has risen by more than 60% since the beginning of the year, while nickel has risen by almost 50%.

Nickel, an essential metal for building electric vehicles, trades at just over $ 30,000 a ton on the LME, which has introduced daily price limits on its major contracts since the chaos in trading.

Shares of Tesla’s battery maker plunge after net profit slides Source link Shares of Tesla’s battery maker plunge after net profit slides

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