TSLA Stock Can Shake Off Tesla’s Latest 62,900-Vehicle Recall

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Tesla (NASDAQ:TSLA) is starting this week off with some less-than-positive news. Just after resuming production in China, the electric vehicle (EV) innovator is faced with another setback. The company has announced a large recall of EVs sold in both China and the U.S. TSLA stock is not reacting well to the news, but that doesn’t mean investors should be worried. This isn’t the first recall that the company has seen. The company has issued several others in 2022 alone, but each time, shares have been quick to rebound.

Tesla (TSLA) Motors Assembly Plant in Tilburg, Netherlands.
Source: Shutterstock

What’s Happening With TSLA Stock

TSLA stock is down following this morning’s announcement. The recall is for 62,900 Model 3 Tesla SUVs. Inside EVs reports that “the speedometer may be displayed incorrectly while Track Mode is engaged” on these vehicles. This means that the driver may not be aware of how fast a vehicle is traveling, therefore increasing the risk of a crash.

Since markets opened, TSLA stock has been highly turbulent. It began the day by dipping but was quick to shoot up, rising almost 3% before it fell again. As of this writing, it is down 0.19%. This was all within the first hour of trading, though, and the stock has plenty of time to turnaround.

Why It Matters

As noted, Tesla has issued vehicle recalls multiple times since 2022 began. It has had to recall EVs due to problems with full-self driving (FSD) technology, seatbelt chimes and the boombox feature. Each time, TSLA stock has only dipped slightly, if at all, before rising back into the green. In some cases, shares haven’t even fallen on recall news, as positive momentum has proved more powerful.

This is partially due to the fact that Tesla recalls aren’t true recalls. The vehicle malfunctions that prompt them can almost always be solved by over-the-air (OTA) technology, another area in which Tesla’s innovations have been instrumental. This case will be no different. Vehicle owners won’t have to lift a finger, as Tesla’s OTA updates should take care of all problems and get them back on the road soon. Recalls don’t usually push stocks down for too long, and in Tesla’s case, they have never been a serious problem.

The theme of recalls also hasn’t undermined trust in Tesla as a brand. Demand for its cars has only risen this year, as evidenced by its status as the world’s most searched automaker. And while some experts have expressed skepticism that the company can keep pace with this demand, so far, it hasn’t been a problem. Tesla reported record-setting sales figures for the first quarter of this year. Furthermore, it has no plans to slow down.

What It Means

The bottom line for investors is that today’s news isn’t cause for concern. TSLA stock is fighting hard to overcome the negative momentum spurred by the recall, and it will push back into the green soon. The company has proven repeatedly that not much can keep it down. But more importantly, it has proven that recalls certainly can’t.

Tesla buyers seem to be accepting that these OTA recall fixes are part of driving an elite EV. The culture is changing for car owners, and they are on board. Investors can rest assured that TSLA stock can and will overcome any recalls.

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/2022/05/tsla-stock-can-shake-off-teslas-latest-62900-vehicle-recall/.

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