Tesla Tanks ~4% as Car Explosion Video Raises Concerns


Tesla (TSLA) has underperformed the broader market and all mainstream automakers in 2019 so far. As of April 18, Tesla was trading with a 17.9% YTD loss as compared to 15.9% and 20.5% gains in the S&P 500 Index and the NASDAQ Composite Index. By comparison, other auto companies such as General Motors (GM), Ford (F), and Fiat Chrysler Automobiles (FCAU) have gone up by 20.5%, 24.8%, and 14.0% YTD, respectively.

Tesla Tanks ~4% as Car Explosion Video Raises Concerns

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Recent developments

On April 11, the Nikkei Asian Review reported, “Tesla and Panasonic are freezing plans to expand the capacity” of their Nevada-based Gigafactory, citing lower-than-expected demand of Tesla cars as one of the reasons. On April 13, Musk said in a tweet that “Tesla won’t spend money on more capacity until existing lines get closer to 35GWh theoretical,” apparently blaming Panasonic for not producing enough battery cells, constraining Tesla’s Model 3 production.

Nonetheless, Tesla stock rose by 2.1% in the week ended April 18 as investors remained hopeful of a settlement in a legal case where the SEC has requested a federal judge to hold Musk in contempt.

Car explosion video

Today at 10:58 AM EST, TSLA was down 3.8% for the day. Yesterday, a video posted on Chines social media platform Weibo showed a parked Tesla car “emit smoke and burst into flames seconds later,” Reuters reported. The report also added that Tesla is currently investigating the video and “supporting local authorities to establish the facts.”

The company is likely to hold the Tesla Autonomy Investor Day event later today at its headquarters.