Continuing what has become a trend this year, Tesla (NASDAQ:TSLA) is issuing another recall. TSLA stock is down today after the electric vehicle (EV) innovator announced a recall of almost 130,000 EVs due to central processing unit (CPU) problems. The company has issued several other recalls this year, but TSLA stock has suffered very little. While shares are down today, there’s no reason to suspect that this time around will be any different.
What’s Happening With TSLA Stock
TSLA stock is back in the red today after falling yesterday. The company reacted well to Monday’s market selloff, but today its performance has been turbulent. It began the day with a slight rally but has been moving downward since then. As of this writing, TSLA is down 5.6% for the day and isn’t showing signs of a rebound. That said, this difficult trading day doesn’t mean that the recall will keep TSLA stock down for long.
Why It Matters
What exactly is happening with Tesla vehicles that prompted the recall? As Electrek reports, “The automaker has detected a problem where the center display may become laggy due to CPU overheating when pre-conditioning the battery pack for Supercharging or when Supercharging.”
That’s the bad news regarding the recall. But there’s also good news — and it’s more important for TSLA stock than the bad. After all, Tesla can address this problem through over-the-air (OTA) measures. All it will take to get these cars back on the road is a basic software update.
These recalls don’t keep Tesla stock down because technical glitches can almost always be resolved with OTA fixes. May 2022 began with more than 62,000 Teslas being recalled due to a problem with their speedometer display. But that didn’t keep TSLA stock down for long.
Two weeks before that, a problem with the company’s vehicle boombox feature led to another recall, which also did not harm TSLA stock in the long term. These recalls are almost commonplace for Tesla. As the company continues to experiment with automotive innovations, they will likely continue. However, that doesn’t mean that investors should be worried about Tesla’s future or growth prospects.
What It Means
Tesla’s performance today is largely due to negative market momentum as well. Bearish energy continues to surround Wall Street following the Federal Reserve rate hike, and investor confidence is low. These macroeconomic headwinds are much more likely to affect a name like TSLA stock than a vehicle recall. Tech stocks rallied yesterday, but negative market forces are strong.
While we don’t know how long TSLA will be down, we do know that it can survive both selloffs and large recalls. The impacted vehicles will be back on the road soon, and TSLA stock will be roaring alongside them. Investors can be confident that Tesla will continue to rally through these difficult times and continue powering ahead.
On the date of publication, Samuel O’Brient did not hold any position (either directly or indirectly) 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.
