Electric Car Maker Tesla Sees Big One-Day Drop in Stock Price

The price of Tesla stock finished significantly lower amid fears it may not be competitive in the electric vehicle market because of its size. Further depressing the stock price was the 180-day lockup period that enabled stocks to be sold after its initial public offering six months ago.
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Reuters (via Yahoo) reported Tesla stock fell more than 13 percent at $26.14 on the Nasdaq. That was higher than its debut price of $17 per share. Tesla shares rose more than 40 percent on their first day of trading to more than $23. Today’s share price still puts the stock ahead of its opening day high.

The Reuters article also said last week Capstone Investments analyst Carter Driscoll initiated Tesla at a "sell" with a $22 target, saying the market for electric vehicles will not grow as quickly as expected. Driscoll said he did not believe Tesla would be able to reach its projected earnings before interest and taxes target of 14 percent to 16 percent.

Edmunds.com paints a possibly gloomy future for the electric-car manufacturer and says it could soon be irrelevant. “The biggest problem facing Tesla is that every automaker is now seriously looking into electric vehicles on some level, and this provides competition from far more established and far better funded organizations,” commented Edmunds.com Senior Analyst Karl Brauer. “Tesla’s partnership Toyota suggests a possible place for them within the emerging electric car market, but the company could also be simply overwhelmed -- and overspent -- by the bigger players, making Tesla irrelevant in a relatively short timeframe.”

Edmunds.com analysts expect hybrid electric cars, plug-in hybrid electric cars and battery electric cars accounted for less than 2.5 percent of all vehicles sold in 2010 and will remain well under five percent of the new car market for at least the next three years.

The company has taken orders for 3000 of its Model S line, which does not become available until mid-2012. It has sold more than 1400 of its Roadsters in 31 countries. Panasonic has invested $30 million in Tesla. The investment was made through the purchase of Tesla common stock in a private placement at a price of $21.15 per share. The investment builds upon a multi-year collaboration of the two companies to accelerate the market expansion of the electric vehicle.

This comes amidst news that Tesla has sold 100 of its Roadster models in Germany, the company’s second biggest market after the U.S. The “lightning green” Tesla Roadster Sport 2.5 – raced and signed by Sebastian Vettel and other racing superstars – was delivered to Lennart Hennig, 25, an entrepreneur who founded an advertising company in Bonn, Germany. This is Hennig’s second Roadster.

Related article: Tesla Takes 3000 orders for Model S


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