The impact of brake failure rights protection event on Tesla Motors: Stock prediction based on ARIMA model

School of Economics and Business Administration, Chongqing University, Chongqing Municipality, 400044, China

^* Corresponding author: 20216130@stu.cqu.edu.cn

Abstract

On April 19, 2021, the Shanghai Auto Show witnessed a rights protection incident involving Tesla’s brake failure. The arrogant official response has eroded consumer trust and had a detrimental impact on Tesla’s operational performance. This article employs the ARIMA model to analyze Tesla’s stock price data, selecting data from a year prior to and following the incident. The forecast findings are analyzed to determine the impact of the event on Tesla’s stock prices, followed by advice for investors on decisionmaking. According to this article, Tesla’s stock prices were significantly negatively impacted by the rights protection incident. Meanwhile, policy lags and the absence of a weak efficient market could be blamed for the notable shift in stock price that occurred only starting on the seventh day of the event. This suggests that investors could leverage the interval of time between the occurrence of the event and the occurrence of stock price variations to their advantage when managing their investments.