How Did Investors React to Panasonic’s Investment in Tesla?



Tesla-Panasonic update

On December 27, 2016, Tesla Motors (TSLA), the popular electric carmaker, announced that it reached an agreement with Panasonic “to begin the manufacturing of photovoltaic (or PV) cells and modules at the Buffalo, NY factory.” Under the deal, Panasonic will invest about $256 million in the Buffalo plant, while Tesla promises to purchase PV cells and modules from the Japanese electronics company for the long term. Now, let’s take a look at how investors reacted to the update.

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Tesla stock surges

On the day of the announcement, Tesla stock rose to a four-month high and closed at $219.53 with 2.9% gains for the session. However, the optimism in Tesla’s stock didn’t last long. Its stock erased the gains in the next two days. As of December 29, 2016, it’s trading at $214.68.

On October 16, 2016, Tesla revealed that it’s in the process of partnering with Panasonic to manufacture PV cells and modules at the plant in Buffalo, New York. Back then, no information was provided on Panasonic’s intention to invest in the Buffalo facility. Panasonic’s decision to invest $256 million in the plant could be the primary reason for the initial optimism among Tesla investors.

YTD performance

As of December 29, 2016, Tesla stock lost about 10.6% on a YTD (year-to-date) basis. Concerns about Tesla’s ability to meet its ambitious 2018 production targets and deliver Model 3 in time could reflect in investors’ cautious approach on its stock.

So far in 4Q16, Tesla recovered ~5.2%. Tesla reported strong growth in its 3Q16 earnings, deliveries, and production rate which could be the key reason for this recovery.

In 2016, General Motors (GM) has gained about 3.3% YTD. Other mainstream automakers (XLY) such as Ford (F) and Fiat Chrysler (FCAU) have witnessed YTD value erosion of about 13.2% and 0.7%, respectively.

In the next part, we’ll look at the key milestones in the Tesla-Panasonic partnership.


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