The Latest Tesla Recall Won’t Matter for TSLA Stock

The concept of full self-driving (FSD) has received increasing discussion as the electric vehicle (EV) industry has progressed. Leading the charge toward automation behind the wheel has been Tesla (NASDAQ:TSLA). CEO Elon Musk indicated last month that the company was nearing a FSD beta rollout in Canada. Recent events, however, may set that back. Today brought reports that the EV innovator will be recalling 54,000 vehicles due to problems with the FSD beta technology that compromise its safety features. This shouldn’t alarm investors, though. TSLA stock is still in the green, and despite some expected turbulence, it continues to trade well in spite of this development.

Tesla (TSLA) badge on steering wheel of car
Source: Christopher Lyzcen / Shutterstock.com

What’s Happening With TSLA Stock

So far, this has been a good week for TSLA stock. The company saw shares rise by 9% yesterday, and today this growth trend seems to be continuing. While TSLA began the day by falling, it was quick to rebound back into the green. As of this writing, it is up 0.3% for the day. If its current pattern is any indication, TSLA stock will continue climbing upward.

Despite this week’s early growth trends, shares remain in the red for the week and for the month. If they keep rising, though, they could easily be back in the green for the week. As of this writing, they are only down for the past five days by 1.6%. That’s the type of decline that can be easily overcome.

Why It Matters

There’s no denying that today’s recall news isn’t great for Tesla. In a nutshell, the FSD software has resulted in compromised models coming to “rolling stops” at some intersections rather than stopping completely. This is understandably deemed a threat to traffic safety. Reuters reports that the National Highway Traffic Safety Administration (NHTSA) has flagged the 2016-2022 Model S and Model X, 2017-2022 Model 3, and 2020-2022 Model Ys as the vehicles with this problem. According to the NHTSA, the FSD beta is allowing Teslas to “travel through an all-way stop intersection without first coming to a stop.”

It’s important to note that the current FSD features don’t actually do all the driving. Drivers still need to be behind the wheel of their vehicle and should keep their eyes on the road. The current technology is an advanced form of driver assistance technology. Despite this setback, it has proved beneficial to plenty of drivers. A few months ago, the FSD technology helped a couple travel safely while a woman delivered a baby in her Tesla en route to a hospital. These types of updates have proved to be TSLA stock drivers and likely will be again.

This isn’t even that bad as far as auto recalls go. However, as Barron’s reports, the current recall doesn’t mean that all the aforementioned Teslas need to be returned to their dealerships. Rather, the problem can be addressed with an an over-the-air software update. For Tesla drivers, that likely isn’t too much of an inconvenience.

What It Means for TSLA Stock

It’s easy to be spooked by headlines when something like this is trending. This isn’t a reason for investors to worry about TSLA stock, though. Recalls don’t generally pose significant risks to auto stocks, and this time is no exception. Tesla’s technology is still being developed, but it is revolutionary. Aside from boosting sales, it drives the type of media buzz that helps keep the company in the public eye.

TSLA stock has seen some turbulence today but we chalk that up to negative market momentum. Investors can proceed with knowledge that Tesla’s news of the day won’t do any harm to share prices.

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.


Article printed from InvestorPlace Media, https://investorplace.com/2022/02/the-latest-tesla-recall-wont-matter-for-tsla-stock/.

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