A Tesla logo is seen on a Tesla car Model 3
Nicolas Asfouri/AFP via Getty Images
Tesla’s highly anticipated artificial intelligence day might not be enough to snap the stock out of its recent trading range. For that to happen, bullish investors might have to wait until early 2022.
Tesla (ticker: TSLA) stock is down about 1.6% in premarket trading Thursday, which looks to be another tough day for the market. S&P 500 and Dow Jones Industrial Average futures are down 0.8% and 0.9%, respectively. The S&P dropped 1.1% Wednesday.
Including premarket moves, Tesla stock is down about 4% year to date and 14% over the past six months. For every positive for the stock–such as better than expected earnings and strong delivery numbers–there seems to be a competing negative. Some of the negatives can be blamed on the company while others are out of its control.
Rising interest rates, which hurt richly valued growth stocks more than others, knocked Tesla shares down 15% in February. The company has no control over rates. And the global automotive semiconductor shortage has dogged all car companies all year, making it difficult to deliver cars even though demand has been higher than expected coming out of the 2020 Covid-induced recession.
Tesla has also been dogged by safety concerns regarding its autonomous driving functions. NHTSA opened an investigation into 11 crashes involving Tesla’s driver assistance features. And senators Richard Blumenthal of Connecticut and Ed Markey of Massachusetts sent a letter to the FTC asking the agency to look into Tesla’s marketing of its autonomous driving features. Those two things might keep a lid on a positive stock reaction to Tesla’s artificial intelligence day, which is slated to begin Thursday evening.
Big Tesla events don’t always result in a positive stock pop. For starters, Tesla hosted an autonomy day in April 2019, detailing progress it was making on its self-driving technology. The stock dropped about 3%over the next six months, while the S&P 500 rose about 3%.
Tesla stock also dropped more than 15% over the two days around its battery technology event held in September 2020. Still, the stock rallied about 85% from the post-battery day drop into year-end. That’s a huge move, but Tesla was also added to the S&P 500 between the battery event and the end of 2020.
A catalyst like S&P 500 inclusion isn’t in the cards in 2021.
Bullish investors might have to wait for new capacity to come online in Texas and Berlin, Germany for the stock to move higher again. More capacity would give investors confidence that the company can deliver about 1.3 million units in 2022, up about 50% compared with the 860,000 deliveries expected in 2021.
New production, which would be reflected in quarterly statistics, would also give investors confidence that Tesla has the battery and microchip supply required to meet its lofty growth goals.
The Texas facility is expected to make the Model Y and Cybertruck. The Berlin factory is expected to make cars for the European market. The Berlin plant would free up Tesla’s Shanghai facility to focus more on the domestic Chinese market. Both plants are expected to come online around the end of 2021. CEO Elon Musk recently said Tesla’s German facility could be ready to make cars as soon as October.
After capacity Tesla investors will want another catalyst. That’s likely to be a car that has a smaller size and lower price than a Model 3. Timing and details of that next product aren’t known, but bulls are expecting something to be shared in 2022.
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