Tesla Stock Goes for 3 Gains in a Row as it Shrugs Off Safety Inquiry

Dow Jones
Aug 03

Tesla stock rose early Monday, going for three gains in a row after a brutal stretch following the company's second-quarter earnings report. An investigation into a safety issue by the National Highway Traffic Safety Administration isn't bothering investors too much.

Shares of the EV maker were up 1% at $314.17 in premarket trading, while S&P 500 and Dow Jones Industrial Average futures were up 0.5% and 0.8%, respectively.

If Tesla can rise on Monday, it will be three consecutive gains. Shares closed below $300 for the first time in more than a year this past week. Weaker-than-expected second-quarter earnings reported on July 22 contributed to a six-day losing streak, sending Tesla stock down more than 20%.

The Elon Musk-led company reported an operating profit of about $400 million, roughly $1.3 billion less than Wall Street was projecting. What's more, management didn't provide investors with many new details about its AI plans, which include robo-taxis and robots.

AI progress matters more than the core car business these days. Monday is another example. NHTSA recently opened an investigation into more than a million Tesla vehicles for a potential suspension issue. A front suspension part can become detached, leading to a potentially dangerous driving condition.

In the past, an investigation might have led to a temporary reaction in Tesla's stock price. But investigations and recalls are a normal part of automotive operations in the U.S. (Investigations come before NHTSA issues a recall to fix a potential safety issue.)

Millions of cars from dozens of vehicle makers are recalled each year. It's part of the process of keeping vehicles safe. Recalls rarely lead to stock market reactions. Typically, they are only watch items for automotive investors.

 

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