Investors were not very enthusiastic about the improved model of the S Plaid and the stock fell last Friday to $ 609.89, according to Richard Saintvilus on Nasdaq.com
With a drop of 1.12% in the last thirty days, Tesla shares have lost 13.6% this year, behind the 13% increase in the S&P 500 index.
Built in the same mold as the Model S sedan that began selling nearly a decade ago, the “Plaid” version features not only a redesigned interior and fork steering wheel, the Plaid is also much faster and more expensive. With the ability to accelerate from zero to 60 miles per hour in less than two seconds, Tesla CEO Elon Musk has touted the Plaid as the fastest production car ever built.
But can this improve the electric car firm’s operating fundamentals?
“For example, it’s great that Tesla’s cheapest and most profitable sedans, such as the Model 3, and the company’s latest offering, the Model Y compact SUV, have been hugely popular. At the same time, these cheaper models come at the expense of the more expensive Model S, hurting Tesla’s profit margins. Since the Plaid is more expensive, starting at $ 131,100, Tesla will have to produce and deliver a higher percentage to compensate for the effect of the Model 3 and Model Y “, India Saintvilus.
Wall Street has been broadly positive about the Model S Plaid. While reiterating its Buy rating on (TSLA) shares, Goldman Sachs spoke enthusiastically on Friday about the potential and differential effect of Plaid for Tesla. “While the Plaid market itself is relatively small, We believe this is an important product as the Model S Plaid helps illustrate Tesla’s technological leadership position., which we consider one of the reasons for its strong participation in electric vehicles, “said the firm.
An example of Tesla’s technological leadership is the Plaid’s new electric motor, featuring “carbon sleeve” rotors. Essentially, to overcome some of the pressure on the high spin speeds, Tesla engineers sheathed the copper coils in carbon. Likewise, the analyst Dan Levy from Credit Suisse he also applauded the launch of Plaid. “The importance of the Model S Plaid launch is to remind us that while Tesla has great aspirations, your brand’s DNA is performance“Levy pointed out.
While maintaining its Neutral rating, Level still questions whether the Plaid, compared to the Model 3 and Model Y, it can push the needle just enough to affect Tesla’s profit margins in a significant way.
“It is possible that these questions, including those related to new batteries, not answered for several quarters. But the company said that Plaid deliveries have already started, along with expectations to produce around 1,000 Plaids per week in the next quarter, ”concludes Saintvilus.
Meanwhile, investors like ARK Investment Management by Cathie Wood, which has an ETF with a large stake in Tesla, expect the stock to perform in line with Plaid’s velocity.