Apple, Tesla stock tumble as China imposes COVID restrictions

The shares of Apple Inc. TSLA and Tesla Inc. AAPL are falling in premarket trading on Monday, two companies that rely heavily on China for both production and sales.

China has imposed stricter COVID-19 curbs on new cases, which is officially known as zero-COVID policy. The restrictions have impacted the life of the common man, prompting people to resort to protests. Voices opposing Chinese President Xi Jinping have gained strength.

Apple, Tesla and Their China Connection: Apple has warned of a short supply of iPhone Pro variants due to the disruptions at the Hon Hai Precision Manufacturing Company Limited HNHPF factory in Zhengzhou. As the situation worsens, the impact could be larger than originally estimated. According to a Bloomberg report, about six million fewer iPhone Pro models would be produced due to the situation in China.

The disruptions could cost Apple heavily in the key holiday selling season.

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Gene Munster, Loup Funds spokesman, said that 75 80% of the company's product sales, or 60 - 62% of overall sales, are Made in China. Cupertino is heavily reliant on China for its revenues, as the Greater China region, consisting of China, Taiwan, Hong Kong and Macau, contributes about 18% of the company's total annual revenue, he said.

Like Apple, Tesla has a lot of revenue and production exposure to China. About half of its global production is made at the Giga Shanghai plant. The factory is a key factor in the margin perspective due to the cheaper labor costs.

The recent run-up of Tesla may have resulted in a weakness in the stock of Tesla. The stock has advanced about 10% after slipping to a two-year low of $166.19 on Wednesday.

According to Benzinga Pro data, Apple fell by 1.90% to $145.30 and Tesla moved down 2.27% to 178.70 in premarket trading.