Safety is very important in the automotive market. Safety recalls and investigations, ironically, are not as important.
Investors can’t tell that by looking at stocks. Shares of Tesla (ticker: DSLA ) fell 3.7% in midday trading Wednesday, the same day the National Highway Traffic Safety Administration opened an investigation into the steering wheels. can be separated. The
S&P 500
It was down by 0.2%
Nasdaq Composite
It was flat.
NHTSA has opened an investigation into 2023 Model Y vehicles. Agency received Two complaints Regarding cars supplied without steering column fixing bolts.
So far this year, NHTSA has opened ten investigations into vehicles made by Tesla. Ford Motor (F), Kia (000270.Korea), Volkswagen (VOW3.Germany), and others.
An investigation could lead to a recall requiring automakers to fix problems that could affect safety. Investors have been paying more attention to recalls recently as EVs have started to grow rapidly across the country.
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Stock movement and inquiry are coincidental, but not directly related. And recalls aren’t usually investor-level events.
The top 12 U.S. automakers have recalled about 26 million vehicles in the past 12 months. Tesla has recalled about 3.8 million vehicles. Ford has recalled about 8.8 million. General Motors (GM) recalled nearly 3.4 million.
Big, aggressive pullbacks can hurt stocks. But investors understand the cost of repossession and maintaining vehicle safety is part of doing business in the car market.
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The big issue for Tesla stock on Wednesday was the ratings downgrade. Berenberg analyst Adrian Yanoshik downgraded Tesla shares from buy to hold. He raised his price target to $210 from $200.
Yanoshik upgraded the stock to buy on Jan. 27, saying the market had overreacted to Tesla’s price cuts for vehicles in early 2023. The cuts initially spooked investors. A price cut on Chinese vehicles pushed the stock to a 52-week low of $101.81 on Jan. 6.
Yanoshik said the price cuts demonstrated cost leadership and that Tesla would gain market share as a result of the lower prices. It seems he was right. Tesla’s share of the Chinese battery-electric vehicle market increased in the first two months of 2023.
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Now, with Tesla shares up nearly 20% since the upgrade, the risk/reward equation has shifted for Yanoshik.
57% of analysts buy Tesla rate shares. The average buy-to-value ratio for stocks in the S&P 500 is about 58%. A few weeks ago, 65% of analysts rated Tesla stock as buy. That ratio is an all-time high for Tesla stock.
After shares fell 65% in 2022, Wall Street jumped at the chance. Later, after stocks fell more than 100%, Wall Street took some gains.
Write to Al Root at [email protected]
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