Tesla Unveils Model 3 Tonight: Does History Show Investors Will Be Rewarded?
Tonight likely marks the most critical night in Tesla Motors Inc (NASDAQ: TSLA)'s 12-year history. CEO Elon Musk is set to unveil the highly-anticipated Model 3.
The Model 3 is Tesla’s first venture into the mass automobile market and is expected to price at around $35,000. The Model 3 could mark the beginning of Tesla’s transition from a niche luxury brand to a mainstream electric automobile giant.
The market seems to have high hopes for the Model 3, as Tesla’s share price is up 3.4 percent in Thursday’s session and an incredible 55.9 percent since February 11. But will tonight’s event be the beginning of a Tesla surge to new all-time highs, or will traders sell the news and book their profits from the stock’s big upswing?
Unfortunately, there is very little precedent at Tesla for an event like this. The unveiling of the Tesla Roadster in 2006 and the Model S in 2009 happened before Tesla’s IPO in June 2010.
For Tesla traders, the most comparable precedent for tonight’s unveiling is the February 9, 2012, unveiling of the Model X.
On the day after the event, Tesla’s stock plunged 4.5 percent. However, by one week later is was up 4.9 percent and by February 17 it was up 7.3 percent.
The October, 2014 reveal of the All Wheel Drive versions of Tesla's Model S 60, 85, and P85 was met by a 7.8 percent sell-off the following day. A month later the stock was down only 6.5 percent.
If the Model X launch is any indication, Tesla shareholders could be in for some major volatility in coming days, but should be hopeful that the market reaction will ultimately be positive.
— Benzinga.com (@Benzinga) March 31, 2016
Disclosure: the author holds no position in the stocks mentioned.
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