Friday Apr 19 2024 14:18
4 min
Tesla shares are poised to decline for a sixth consecutive day following the announcement of a recall for the highly-publicised Cybertruck due to an issue with the accelerator pedal.
Although recalls are common in the automotive industry and typically do not alarm investors, the small scale of this recall has attracted attention.
The recall, as reported by the U.S. National Highway Traffic Safety Administration, affects 3,878 Cybertrucks, a number that likely represents all the units delivered to date. Tesla has not confirmed the exact number of deliveries.
At the time of writing on April 19, Tesla shares were down 0.25% in early trading at $149.53.
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The company kicked off deliveries of its stainless steel pickup truck at the end of November. Based on the recall timeline, Tesla has been delivering approximately 200 trucks weekly until mid-April, when production was temporarily halted to fix the accelerator pedal issue.
Tesla has yet to specify Cybertruck delivery figures in its official results, forcing investors and analysts to estimate based on vehicle registrations, which suggest that between 5,000 and 6,000 units might currently be in use.
This delivery shortfall is significant as Wall Street anticipates Tesla to produce between 40,000 to 50,000 Cybertrucks in 2024, with a long-term goal of 250,000 vehicles annually by 2025, as claimed by CEO Elon Musk.
The current recall involves a physical adjustment, as "the accelerator pedal pad may dislodge and become trapped by the interior trim," requiring hands-on intervention from a dealership rather than the more typical software update, as noted by Barron’s correspondent Al Root.
Major U.S. automakers have recalled close to 30 million vehicles last year, with Tesla's recalls totaling about 2.6 million.
Tesla shares have dropped every day this week, falling by over 12%, exacerbated by news of mass layoffs affecting about 10% of its 140,000 global workforce.
Ahead of the Tesla Q1 earnings report and upcoming address by CEO Elon Musk next Tuesday, investors are eagerly awaiting details on strategies to boost growth, which might include new vehicle models, autonomous robotaxis, increased Cybertruck production, or expansions into utility-scale battery storage.
As the Tesla call approaches, earnings expectations have adjusted to about 50 cents per share, down from 85 cents in the first quarter of 2023. Since the company reported disappointing first-quarter delivery numbers, Tesla earnings estimates have come down from about 60 cents.
“Only time will tell whether estimates have come down enough,” wrote Barron’s Al Root.
Coming into Friday trading, Tesla shares have fallen 15% this month and 40% year-to-date (YTD).
The benchmark S&P 500 index has slid by close to 4.2% over the past month, although it remains 5.15% up (YTD).
When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.
Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
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