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What happened
The stock of You’re here (NASDAQ: TSLA) is acting pretty funny this week. Yesterday, as the rest of the stock market roared upon learning that Pfizer had a 90% effective coronavirus vaccine, Tesla’s stock fell 2%.
Today it is happening again. Twin reports on Tesla’s fanboy website Electrek appear to be weighing on stocks. They fell 6% in morning trading, and while the stock reduced those losses somewhat, it remained down a disheartening 2.8% as of 12:15 p.m. EST Tuesday.
Image source: Getty Images.
So what
So what’s the bad news about Tesla this time around? Two things:
First, Electrek reports that Tesla is responding to complaints from the National Highway Traffic Safety Administration about component failures that rendered certain touchscreens on older Model S and Model X vehicles unnecessary. Tesla acknowledges the agency is right and offers extended warranties to homeowners to resolve the issue.
On the one hand, this implies additional warranty costs for Tesla, which could lower profits. On the other hand, Tesla going the extra mile to take care of its customers is not a wrong thing for the business. On the contrary, it is something that would only improve customer loyalty, and therefore is not a good reason to sell Tesla shares.
The second element could be more serious. In Germany, says Electrek, citing Automobile week (Automobile week), Tesla is struggling to get the permits to complete construction of its Gigafactory Berlin. The company relies on that plant to support sales of its Model Y crossover in Europe, and construction delays could kickstart that plan.
Now what
And yet, as Electrek notes, Tesla still expects the Gigafactory Berlin to be up and running by July 2021, and Elon Musk is already getting personally involved in trying to redress the licensing situation. So, this also seems to be a hiccup in the business, but will be fixed soon.
If I were invested in Tesla stocks (and I am not), I think I would be much more concerned with its irrationally exuberant P / E ratio of 817 – but not at all worried about that hiccup.
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