Tesla Inventory Drops Whereas Different Automakers’ Shares Rise Following Tesla Investor Day — What Occurred?

What went improper? Tesla held an enormous Investor Day occasion, but on the finish of it, Tesla’s inventory tanked and the shares of competing automakers rose. I’m going to offer a couple of totally different views right here to attempt to make sense of all of it.

Initially, I’ve coated Tesla for greater than a decade, and one of many clear patterns in that point has been that “purchase the rumor, promote the information” may be very sturdy with this inventory. Convention name after convention name, particular occasion after particular occasion, Tesla inventory [NASDAQ:TSLA] would drop after the massive present. Whether or not that’s all gaming the system or there’s one thing substantive to it, I don’t know, nevertheless it’s been a transparent sample. In that case, does it matter what was introduced? Would the inventory tank it doesn’t matter what? Properly, maybe it’s only a psychological affliction I’ve, however I do suppose what was within the presentation mattered. If Tesla had stated, we’re going to begin producing a $25,000 “Mannequin C” (or choose your favourite identify for the mannequin) on April 1, I think about the inventory would have spiked.

And that does convey up one potential rationalization. Virtually the entire hype or curiosity I noticed about Tesla Investor Day 2023 main as much as it involved that lower-cost mannequin everybody appears to be on the sting of their seats ready for. One can say that may be a “Tesla Mannequin C” occasion, not a “Tesla Investor Day” occasion. That’s certainly how Tesla has traditionally performed it, however I believe there was expectation as a result of there was the concept Tesla was being a bit stealth about it (if Tesla introduced it was having an occasion for a less expensive mannequin, that might damage present demand for the Mannequin 3 and Mannequin Y). Additionally, Tesla’s third grasp plan was presupposed to be all about scaling up, and what’s important to scaling all the things up? A vastly mass-market mannequin or two, a lower-cost Tesla that extra individuals can afford. Now, I’m not going to lie — I at all times thought the occasion was in regards to the provide chain, and that Tesla wouldn’t announce a brand new mannequin at this sort of occasion. Nonetheless, I additionally noticed that it was clearly what was anticipated.

If no more a few potential low-cost Tesla, I believe many traders/merchants have been anticipating some sort of huge breakthrough announcement, one thing each surprising and tangible/plausible. It seems there was no such information, and thus Wall Road’s response. However that additionally doesn’t seize the total response. …

Not solely was Tesla inventory down 5.85% yesterday — shares of some opponents have been up lots. XPeng inventory [NYSE:XPEV] was up 5.3%, NIO inventory [NYSE:NIO] was up 2.9%. Even Ford inventory [NYSE:F] and GM inventory [NYSE:GM] have been up — 1.9% and a pair of.3%, respectively. BYD inventory was additionally up (2.1%). Absolutely, that’s not all a coincidence.

The very best rationalization I can suppose up is that, with out extra proof that Tesla is doing one thing greater within the inexpensive EV house or with some breakthrough expertise, traders suppose that opponents have a greater opening or higher footing available in the market than they thought may be the case the day main into Investor Day.

Maintain on, many individuals have stated. Tesla did really reference a lower-cost mannequin — really a lower-cost platform that a number of fashions would use! That’s higher than what was anticipated, no? Additionally, Tesla introduced some main modifications to its manufacturing processes in in a position to allow this lower-cost platform. And the corporate talked about that the lower-cost fashions could be produced at varied factories all over the world, beginning on the newly introduced Mexico gigafactory. Shouldn’t Tesla get props for all of this?

The very best rationalization I can provide you with for why these bulletins had no obvious impact is that they have been already absolutely anticipated, and within the worst case, they have been additional again within the plans than anticipated. A extra inexpensive Tesla has been lengthy talked about and mentioned. A gigafactory in Mexico was lengthy anticipated and solidly rumored. For the inventory to go up, the information has to surpass the expectations. Maybe this has simply at all times been a Tesla drawback — a lot pleasure main into the occasion that the market is dissatisfied with no matter is introduced. Maybe the hype across the occasion from key individuals made traders suppose it was going to be greater than it was. Maybe within the lengthy presentation, individuals bought misplaced or fell asleep and didn’t discover the additional worth in what Tesla is doing that Elon Musk anticipated them to seek out. Possibly, for short-term impact at the least, the presentation ought to have been shorter, extra centered, and extra merely highlighting a couple of key highlights for the funding world? However hey, perhaps nobody at Tesla (Elon Musk included) cares in regards to the short-term impact and is joyful that the corporate laid out its plans and processes extra fully for Tesla followers and followers who bought one thing from the presentation.

On the finish of the day, Tesla’s market cap is much above that of its automotive opponents, indicating that the funding neighborhood sees a big hole between Tesla and others on future income potential and revenue potential. Nonetheless, one presumes that the intention of Investor Day 2023 was to impress the funding world and enhance the inventory worth, but the consequence seems to be that the funding neighborhood is much less impressed than they anticipated to be they usually even moved over to Tesla’s opponents extra in response. Who’s stunned? What else may need brought about this undesired end result?

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