The recent Consumer Price Index report has sent waves of shock throughout the market with the Nasdaq suffering one of its worst days in recent years, dropping by 5.2%. Companies such as Apple and Amazon also suffered massive losses, and due to the volatility, it is essential to understand the macro environment’s effects on individual stock performances. As for Tesla investors, the day was relatively decent in comparison to other stocks, experiencing a 4% drop. However, the news coming out of the CPI report did not bode well. The core CPI’s month-over-month increase was 0.6%, tying with other months in the last 12 months, and a YoY increase of 6.3%, higher than July. This marks the first time in the last five months that the core YoY number has not stayed the same or declined, leading to concerns that inflation is not under control. As an integral part of the market, these takeaways mainly impact expectations for action by the Federal Reserve, with increased probability given to a 150 basis point increase.
Tesla’s strength during this period is noteworthy, considering the overall market’s state, but one can only do so much during losses of this magnitude. However, we’ll have to wait to see where things go from here. Tomorrow’s Producer Price Index report will give us a glimpse of what’s to come.
Martin Viecha, Tesla’s Head of Investor Relations, presented at Goldman Sachs’ (GS) Communicopia Plus Technology Conference, discussing long-term supply and demand issues, Tesla’s potential for Cost of Goods Sold per vehicle to trend low over time, semiconductor and battery cell supply, and more. While investors are concerned about wait times in China, Tesla believes that the long-term demand outlook is strong, making it an important market for exporting. Additionally, supply chain constraints are improving, especially for battery cells and chip supply, which is encouraging news for Tesla investors. While the company believes that semiconductor shortages will not be a limiting factor to production over the balance of this year, there are still uncertainties.
The past week has been busy for Tesla, with the Gigaberlin Tours hosting analysts and other events bringing out comments from Martin Viecha on various topics. One issue of concern has been the supply chain, which Tesla seeks to address. They believe that adding more suppliers will help improve supply chains, and their positive outlook is highlighted by their improved battery cell supply. Tesla’s footprint in the USA also means that it can withstand the recently passed Inflation Reduction Act, although the final impact is still up in the air.
What can investors expect for Tesla going forward? The supply chain issues will undoubtedly remain in the spotlight as global demand for electric vehicles and their parts continues. However, Tesla’s solid performance today despite the shaky market could signal that they are well-positioned to weather the storm. Nonetheless, the company may need to offer more than vague assurances about supply chains to keep investors confident in the future.