This weekend brought some sad news out of Europe as a crash involving a Tesla (NASDAQ:TSLA) Model 3 taxi resulted in the death of one person and injured as many as 20 others. Company G7 responded this morning to the incident by suspending the fleet of 37 taxis of the same model, but Transport Minister Jean-Baptiste Djebbari was careful to note that at present, there were “no elements that would lead one to believe it was tied to a technical problem.” While Tesla stock is down today, it is likely due to factors much closer to the company’s home.
What’s Happening With Tesla Stock
The fatal crash occurred this weekend, although the story is once again catching attention this morning. That comes as officials continue to speak out, and as G7 announced its plans to suspend the Tesla fleet. Tesla stock has been declining since markets opened and is currently down 2%. Shares are down 6% since the week began.
As was the case with yesterday’s declines, though, this downward trajectory is likely being driven by bigger-picture trends. CEO Elon Musk started the week by offloading $906 million worth of Tesla stock, adding on to previous share sales. CNBC reports that by the end of the year, his total offloads could hit $18 billion. While his decision to sell so many shares doesn’t mean bad news, it also doesn’t do much to inspire investor confidence.
Additionally, the auto industry as a whole has been facing the grim reality that 2022 isn’t looking so hot. A recent report from Daiwa Capital Markets’ Jairam Nathan made the case for why investors should regard auto stocks through a conservative lens in the coming year. Specifically, the analyst cited monetary tightening and projected declines in earnings growth. Despite the rapid growth that the EV sector enjoyed in 2021, this type of forecast doesn’t bode well for Tesla stock.
Why It Matters
The Paris crash has led to plenty of worrisome headlines which might paint a frightening picture of what the future holds for Tesla. Its important to note, though, that as Djebbari emphasized, there is no reason to believe that the crash was caused by anything technical for which the company would be at fault. Reuters also reported that it is not clear at this time if the Autopilot mode was on.
If that analysis changes, the story for Tesla would be different. This is especially true as U.S. regulators examine the safety of self-driving features in Tesla vehicles.
However, Djebbari’s comments paint a more neutral picture for Tesla. The fatal crash is a tragic story, it just may not have a lasting impact on Tesla shares.
What It Means
All this doesn’t mean the road ahead will necessarily be smooth for Tesla stock. Nathan’s report is worrisome for the entire sector, and if Tesla sales slow in 2022, things won’t be good for the company.
That said, Tesla has overcome obstacles before and has risen to the top of its field. Musk’s recent decision to allow the company to accept popular meme crypto Dogecoin (CCC:DOGE-USD) will certainly help it stay in the public eye, come whatever may in 2022.
When it comes to Tesla stock, we should keep our eyes on the road ahead.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
