After some big news Thursday night about a new version of the Model S and some new autopilot features, Tesla (NASDAQ:TSLA) stock is down more than 6% at the time of this writing. What's behind the sell-off? Tesla's announcements Thursday night only met expectations, and nothing more. For a growth stock like Tesla, with a very rosy outlook already priced in, sometimes it takes more than meeting expectations to live up to the market's expectations. But as anyone following Tesla stock closely should know, such drastic swings in Tesla's stock price are basically inevitable.
Tesla's D event
Earlier this month, Tesla CEO Elon Musk helped move the stock higher when he teased an Oct. 9 Tesla launch event, saying on Twitter that Tesla would "unveil the D and something else." The image that went along with the tweet showed a model S peaking from beneath a partly opened garage door.
Speculation quickly pointed to a likely launch of a dual-motor version of the Model S and new driver-aid and safety features. For the most part, speculation about the event turned out to be exactly right.
Thursday night Tesla introduced dual-motor all-wheel-drive upgrade options to its current 60 kWh, 85 kWh, and 85 kWh Performance models. Tesla's new flagship 85 kWh Performance dual-motor all-wheel-drive model, or the P85D, sets some new speed records for the Model S. The car gets to 60 mph in just 3.2 seconds and now tops out at 155 mph instead of 130 mph. Also, increased efficiency of the dual-motor system actually added 10 miles to the P85's range, with a new range of 275 at 65 mph.
The new suite of driver-aid and safety features the company announced were mostly a game of catch-up. Consider new Model S features like lane-departure warnings, stopping without driver help to avoid hitting the cars ahead, and resistance to wandering over lanes -- all common features on new high-end vehicle models by other manufacturers.
But a few driver-aid features Tesla announced broke new ground in the industry.
- Lane changes without the driver's help after a turn signal has been turned on.
- A system that reads speed-limit signs and adjusts the car's speed to the posted speed.
- An ability to summon the car to you on private property. The car will even automatically show up and get interior temperatures and music preferences prepared when drivers have appointments on their calendar.
The features will be introduced slowly after the first deliveries to customers who order a Model S today with the tech package. The car will use a combination of software, radar, cameras, and 12 sensors that will come standard in Model S vehicles ordered today. While some of the new driver-aid features will come standard, Tesla's website says autopilot "convenience features" will be added with the addition of the tech package. The reference to convenience features likely refers to the driver-aid features not related to safety.
The Street wanted more
Some speculation leading up to Thursday night's event suggested Tesla could show off the final production version of its upcoming Model X SUV or even give the world a first look at Tesla's Model 3, a lower-cost car that Tesla is aiming to bring to market in 2017. With neither appearing, the stock's recent run-up (which was driven by the hype of the event in the first place) caved to the levels Tesla stock traded at in late September, before Musk's tweet about the D event.
For long-term buy-and-hold Tesla shareholders, the sell-off today has no implications whatsoever; the company's underlying business looks as solid as ever. For investors interested in buying Tesla stock, the euphoric expectations priced into the stock price today, and the recent reminder that shares are likely to trade with lots of volatility, might make waiting for a larger sell-off a wise decision.