Markets

Tesla's wild trading continues as stock rises above $800 again before retreating

Key Points
  • Shares of Tesla climbed as high as the $800 level it hit during last week's wild swing.
  • Part of the reason appears to be positive news from China, after the Shanghai municipal government said it would help companies like Tesla "resume production as soon as possible" in the midst of the coronavirus.
  • The stock's wild speculative trading looks to continue as shares gained steam in premarket trading Monday, well after the Shanghai announcement.
VIDEO2:4802:48
Tesla shares pop in pre-market as Shanghai production is set to resume

Don't look now but Tesla is jumping again.

Shares of Tesla climbed as much as 7% in trading on Monday, rising above the $800 level it hit during last week's wild swing. The stock later backed off those gains, closing 3.1% higher.

Part of the reason appears to be positive news from China, after the Shanghai municipal government said it would help companies like Tesla trying to deal with the coronavirus outbreak "resume production as soon as possible," according to Reuters. Tesla's Shanghai factory has been closed as the Chinese government looks to contain the epidemic that has killed more than 900 people.

The stock looks likely to continue its wild speculative trading. The Shanghai announcement came out Friday evening but shares gained steam Monday.

Overall stock market futures pared their losses after Chinese President Xi Jinping said he would adopt more decisive measures to curb the spread of the coronavirus.

Tesla had a crazy week last week, jumping double digits on Monday and Tuesday and then falling 17% on Wednesday.

The trading is being driven by speculation and a so-called short squeeze, detaching shares from the company's fundamentals, analysts say. The stock reached a record $968.99 last week.

As a whole, Wall Street is the most pessimistic its ever been about Tesla's stock. Many analysts say Tesla's valuation looks stretched, with nearly half of analysts having a sell rating on the stock. Just 19% of analysts say to buy Tesla's stock.

Tesla Shanghai factory in focus

Tesla's China vice president, Tao Lin, announced online last week that car deliveries to customers would be delayed due to the spread of the coronavirus. Lin said the early February deliveries would be delayed, since the company "will catch up the production line once the outbreak situation gets better." According to Reuters, Lin also said Tesla's Shanghai factory would restart production on Monday.

Tesla also temporarily closed its stores in mainland China – a key market for the company. Tesla warned during its quarterly conference call in January that coronavirus issues would dent the next quarter's profitability slightly, although Barclays is skeptical of that explanation.

"We wonder to what extent the company will use the disruption as an opportunity to set up a better 2Q print," Barclays said in a note to investors on Monday.

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– CNBC's John Melloy contributed to this report.