Tesla Inventory Is Useless Cash. AI Day Will not Change That.

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A Tesla logo can be seen on a Tesla Model 3 car

Nicolas Asfouri / AFP via Getty Images

Tesla is eagerly awaited Artificial Intelligence Day might not be enough to tear the stock off the recent one Trade range. For this to happen, bullish investors may have to wait until early 2022.


(Ticker: TSLA) The stock fell about 1.6% in pre-trading on Thursday, which appears to be another difficult day for the market.

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Futures are down 0.8% and 0.9% respectively. The S&P lost 1.1% on Wednesday.

Including the pre-IPO moves, Tesla stock is down about 4% year-to-date and 14% in the past six months. For every positive thing for the stock – better than expected, for example Merits and strong shipments – there seems to be a competing negative. Some of the negative aspects can be blamed on the company while others are beyond its control.

Rising interest rates, which hurt highly-valued growth stocks more than others, dragged Tesla stock down 15% in February. The company has no control over prices. And the global automobile Semiconductor shortage tracked all car companies year-round, making car deliveries difficult, despite the 2020 Covid-induced recession demand has been higher than expected.

Tesla is also haunted by safety concerns about its autonomous driving capabilities. NHTSA opens an investigation in 11 accidents with Tesla driver assistance functions. And Senators Richard Blumenthal from Connecticut and Ed Markey from Massachusetts sent a letter to the FTC asking the agency to look into Tesla’s marketing of its autonomous driving capabilities. Those two things could suppress a positive stock reaction to Tesla’s Artificial Intelligence Day, which is slated to begin Thursday evening.

Big Tesla events don’t always result in a positive stock bang. To get started, Tesla hosted a Autonomy Day in April 2019 that detailed advances in its self-driving technology. The stock lost about 3% over the next six months while the S&P 500 rose about 3%.

Tesla shares also fell by hers in the two days Battery technology event in September 2020. Still, the stock rebounded roughly 85% from the post-battery day decline to year-end. That’s a big step, but so was Tesla added to the S&P 500 between the battery event and the end of 2020.

A catalyst like the inclusion in the S&P 500 is not in sight in 2021.

Bullish investors may have to wait for new capacity to come online in Texas and Berlin, Germany for the stock to climb back up. More capacity would give investors confidence that the company can ship around 1.3 million units in 2022, an increase of about 50% from the 860,000 expected deliveries in 2021.

New productions, which would be reflected in quarterly statistics, would also give investors confidence that Tesla has the battery and microchip supplies it needs to meet its lofty growth targets.

The plant in Texas will manufacture the Model Y and the Cybertruck. The Berlin plant will manufacture cars for the European market. The Berlin plant would relieve Tesla’s plant in Shanghai in order to concentrate more on the Chinese home market. Both plants are scheduled to go online towards the end of 2021. CEO Elon Musk recently said that Tesla’s German plant could soon be ready to build cars than October.

After the capacity limit, Tesla investors will want another catalyst. That’s likely a car that is smaller in size and lower in price than a Model 3. The timing and details of the next product are unknown, but the bulls expect something to be shared in 2022.

Write to allen.root@dowjones.com