Did Tesla Delay The Model 3 Launch?
Tesla Motors’ (NASDAQ: TSLA) stock was trading in positive territory for most of Tuesday when reports surfaced that the company’s target of delivering its Model 3 sedan next year has been pushed to 2018.
Traders and investors passed around a screenshot of an archived copy of Tesla’s website for its Model 3 sedan which said delivery will begin in late 2017. However, the webpage was revised and now suggests that production will only begin in 2017 and delivery for new reservations is scheduled for mid-2018 if not later.
Tesla does have a reputation for missing delivery targets. For instance, delivery of its Model X SUV was originally scheduled for 2013 and production would ramp up the following year. The timeline for delivery kept on being pushed back until the first client took delivery late last year.
Wall Street has forgiven Tesla time and time again. After all, its products, once released, are a combination of technological innovation, sheer beauty, and in heavy demand by clients.
This time however Wall Street won’t be as forgiving.
The pressure is on for Tesla and its CEO Elon Musk to stick to its gameplan. The company said earlier this year that its plans to manufacture 500,000 cars by 2020 can now be realized in 2018. Any change in outlook could ruin Tesla’s reputation among analysts and investors.
Meanwhile, Musk may be on thin ice with the investment community as he is aggressively pursuing an acquisition of Tesla’s sister company, SolarCity (NASDAQ: SCTY) – a move that is being questioned given the cash burn of both companies and an unclear path towards synergy.
So when word started to spread that Tesla is delaying its Model 3 launch, investors and traders aggressively sold the stock which is already lower by more than 15 percent since the start of the year and trading nearly $70 lower compared to its all time high of $269.34
So Is It True?
Tesla’s stock rebounded around $7 and closed the trading session higher by nearly 3 percent on the day after a spokesperson for the company confirmed that its prior outlook of delivering vehicles to clients in 2017 remains unchanged.
This was confirmed in a Benzinga report where a company spokesperson told the media outlet that changes made on its webpage merely reflect a more accurate timeline for clients that have not yet placed a reservation for delivery of the car.
Bottom line, Tesla’s guidance remains unchanged, for the time being. However, the volatility in the stock demonstrates to investors how a simple update on a company’s marketing webpage could create a frenzy among investors and traders.