Key points:
- Tesla's Q2 deliveries were down 17.9%
- The stock price has only fallen 1%
- Why is it that the one large movement produces such a small stock movement?
Tesla (NASDAQ: TSLA) stock is down only 1% premarket following the weekend's news about falling completions and deliveries. This is rather less than we would expect if this news had come out of the blue. The correct answer is that this wasn't, in fact, entirely “new” news, it was largely forecast and for good reason. Things we already know tend not to affect stock prices because we already know them. It's things newly announced that we didn't know which will have significant effects upon Tesla's stock price.
The actual news is that TSLA announced, on Saturday when the markets were all closed (and of course the Amerian markets were also closed yesterday, July 4th) their completion and sales numbers for Q2 2022. These were production of 258,000 vehicles and delivery of 254,000. Given that there's a wait time for a new Tesla that marginal increase in stock levels isn't a grand worry. What does matter though is that these were down from Q1 numbers of 310,048 deliveries, a 17.9% decline.
The thing is we already knew quite a lot of this. The Shanghai factory was closed for three weeks up to April 19th as a result of the citywide covid lockdown. We knew that there were beyond corporate control problems that is. There's also been the problems that everyone has been having with corporate supply chains, especially for semiconductor ships.
Also Read: How To Buy Tesla Shares
The minimal movement in TSLA stock after this 18% drop in deliveries over the quarter is a proof of the efficient markets hypothesis. Which states that markets are efficient at processing information (and that's all it does say too). The implication of this is that things which are already generally known are already in stock prices. So, we knew the Shanghai factory had closed and reopened. We know there are supply chain problems for everyone. Therefore all of that is already in the Tesla stock price.
Another way to put this is that it's new news, not old, which moves stock prices. The other conclusion we can draw from this is that Tesla is being good and efficient at keeping the market informed of what is happening within the business. For example, there's a many hundreds of millions loss on the corporate holdings of Bitcoin in there. Sure there is, with the bitcoin price down to $20k and below. But we already knew what the Tesla holdings of bitcoin were, we can check the bitcoin price any time we like. That is, we already know this information, it's already in the TSLA stock price.
The further lesson from this is that if it's new news which moves stock prices then we have to wait for new information to see the stock price change. The next major information release from Tesla that we expect is on July 20th, when we expect the Q2 financial – not just production – results. Barring any extraordinary announcements, that's our next expected Tesla valuation event.
