In this article, we discuss 5 stocks that will suffer if China invades Taiwan. If you want to see more stocks in this selection, click 10 Stocks That Will Suffer If China Invades Taiwan.
5. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 80
Tesla, Inc. (NASDAQ:TSLA) is greatly dependent on China. Its Shanghai factory was responsible for roughly half of Tesla, Inc. (NASDAQ:TSLA)’s manufacturing in 2021, and China is one of the leading markets for its vehicles. Elon Musk has also said that China has the potential to become the largest market for Tesla, Inc. (NASDAQ:TSLA). If China were to invade Taiwan, Tesla, Inc. (NASDAQ:TSLA) would be impacted heavily in case the People’s Republic decides to ban its vehicles in the country, or if the US pressures Tesla to exit China.
On August 3, Morgan Stanley analyst Adam Jonas said that House Speaker Nancy Pelosi’s visit to Taipei “casts the global battery race into a new light” and noted that Tesla, Inc. (NASDAQ:TSLA) is “highly exposed to both the risk and the opportunity” in the global EV battery dominance. Tesla, Inc. (NASDAQ:TSLA) has the largest exposure to the domestic Chinese market, said the analyst, who also thinks Tesla, Inc. (NASDAQ:TSLA)’s role in building American and Western European renewable energy infrastructure is “underappreciated”. He reiterated an Overweight rating and an $1,150 price target on Tesla, Inc. (NASDAQ:TSLA) shares.
Among the hedge funds tracked by Insider Monkey, Cathie Wood’s ARK Investment Management is one of the leading stakeholders of Tesla, Inc. (NASDAQ:TSLA) as of Q1 2022, with 1.6 million shares worth $1.7 billion. Overall, 80 hedge funds were long Tesla, Inc. (NASDAQ:TSLA) at the end of March 2022, down from 91 funds in the earlier quarter.
Here is what GMO LLC has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:
“To put the demand growth for clean energy materials into perspective, let’s look at Tesla (NASDAQ:TSLA). At its Battery Day last year, Tesla projected three terawatt hours of lithium-ion battery capacity needed in 2030 for the EVs and storage they expect to produce. To reach this target, Tesla alone would gobble up approximately 75% of the world’s current nickel production and four times the world’s current lithium production. These numbers are astounding enough, but when one considers that EVs currently represent just 15% of global nickel demand and about 45% of lithium demand and that Tesla will likely be producing only a small proportion of the world’s EVs in 2030, the implications are staggering. Clean energy materials companies will make a lot more money in the decades to come than they ever have both because they will be selling a lot more metric tons of material and because there are certain to be shortages where supply can’t keep up with the rapidly growing demand.”
