Tesla Stock Surprisingly Soared Instead of Sinking After Huge Recall Announcement

Tesla is probably the most famous EV automaker right now. However, Tesla fans may have woken up to bad news recently, as Tesla announced a massive recall of almost 500,000 vehicles. Despite the bad news, Tesla’s stock rose after that recall announcement. 

A look at this massive Tesla recall

Tesla written out in red on a black background
Tesla logo | Getty Images

One of the cool things about owning a Tesla is how high-tech they are. For example, Tesla has been providing over-the-air updates to its cars allowing Tesla to fix software issues without having owners bring their car into a dealership. However, this recall seems like it’ll require affected owners to bring their cars in.

As the BBC reported, a total of about 475,000 Teslas were affected by this recall. Almost every Model 3 produced is affected, and over 110,000 Model S. The two Tesla models suffer from issues relating to their trunks. In the Model 3’s case, it’s being recalled because frequently opening and closing the trunk may damage the rearview camera cable, which may prevent the rearview camera from working correctly.

The good news is that, according to the BBC, about 1% of recalled Model 3s may be affected by this rearview camera issue. The Model S’ issue, on the other hand, has to do with its frunk. Due to a mechanical issue, the frunk on the Model S may open unexpectedly, which could be dangerous if the car is on the road. Unfortunately, it’s estimated that about 14% of recalled Model S have this issue.

How Tesla’s stock reacted to the news

Interestingly enough, according to Yahoo Finance, Tesla’s stocks have jumped after this massive recall announcement. This recall, which was announced on December 30th, 2021, was met by Tesla’s share price rising mildly during the day. As more people got wind of this news by the afternoons, Tesla’s share price slowly dropped.

That downward trend continued for another day, but Tesla’s stock rallied after the new year weekend. On January 3rd, when the markets reopened, Tesla’s share price spiked. Tesla is not that far from the highs that its stock experienced in November 2021. This fast recovery shows just how powerful and devoted Tesla fans are to the company. The market’s only had a few days to react to this news, so it’s not clear if Tesla’s stock will continue to trend upwards or downwards.

What does the future hold for Tesla?

While the future remains unwritten, it’s easy to see why Tesla fans are optimistic despite the bad news. As the BBC reported, Tesla’s not aware of any accidents or injuries that may have occurred from these issues. Some Tesla fans may write off this news as a necessary recall but not a serious one. 

However, this isn’t the first significant issue that’s affected Teslas. It might do some harm to Tesla’s reputation. A long list of controversial issues surrounding Tesla’s cars, especially its semi-autonomous self-driving feature, does not help either. However, it’s unclear if Tesla’s reputation has taken a hit and how much that would affect Tesla’s future.

In the company’s defense, every major automaker has made mistakes in the past. There are a lot of active recalls going on right now, and most recalls don’t seem to have that much of an effect on an automaker’s reputation. So, this recall may be a minor speed bump for the company.

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