Tesla is down $20billion in pre-market trading due to the recent news. However long-term tesla investors shouldn’t be worrying.
The news specifically is:
Tesla Inc is recalling over 475,000 Model 3 and Model S electric cars, the U.S. safety regulator said.
For Model 3 sedans, rearview cameras mounted on these units might malfunction, increasing the risk of a crash, the U.S. National Highway Traffic Safety Administration (NHTSA) said
To Quote Gary Black, the Managing Partner of the The Future Fund LLC;
This is noise everyone. It’s an insignificant cost unless you think $TSLA will have a similar size recall each year that can’t be solved with a software update. The investment focus should be on strong 4Q deliveries and production on Sunday.
The cost of this recall on the share price is a one-time impact of: 475K x $200 x (1 - 15% TxRt) / 1.15B FD shares = $.07/share. If the cost is $500/vehicle to repair, the impact to the stock price is $.17/share.
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