Despite the headlines of the introduction of the new Model 3 by Tesla, Inc. (NASDAQ: TSLA), shares fell 4.1% this Wednesday, in the wake of downbeat deliveries data. This weakness, however, should be relatively short lived, as many investors will start focusing on said introduction.
The stock fell towards the lowest closing level seen by them since May 30th, putting the stock 11.8% lower than the June 23rd record close they had of $383.45. A correction is commonly defined by a decline of at least 10% up to 20% from a significant peak.
The selloff came after Tesla stated late Monday that it delivered 47,100 vehicles during the first half of the year, which was on the low end of the projected 47,000 to 50,000 vehicles. What could also be weighing on the stock are concerns over a buildup in inventory, because Tesla produced almost 4000 more vehicles than delivered in the second quarter.
There were also issues affecting deliveries, specifically a production shortage of battery, that was resolved in June. “The release of [second-quarter] deliveries data was another de-risking event for the stock, and we expect shares to trade higher as investors are increasingly able to focus on the Model 3,” Kallo wrote in a note to clients. “We believe investors will look forward to the Model 3 introduction on July 28, and the stock could make new highs as Model 3 production ramps.”
The Model 3, as many already know, is Tesla’s all-electric sedan priced for mass consumption at around $35,000, about half of the price of previous models. Production is thought to exponentially increase, from about 100 vehicles in August, to 1500 in September, to 20,000 a month by December.
Other plans that Tesla has excluding the Model 3 within the next 18 months include gross margin expansion, gigafactory construction, accelerating growth of Tesla Energy sustainable fuel business, and a potential Model Y semi-truck.
Regardless of the signs of weakness that Tesla has recently shown, it has jumped 58% year to date, while rival General Motors Co., has only crawled up 0.3%.