After a few fires hit
Tesla Motors' (
Model S, investors started to panic about the near term future of
the stock. Concerns were building that the battery pack was too low
to the ground and that this was being punctured too easily, leading
to the trio of fiery crashes that have sent shares of TSLA plunging
in recent sessions.
In fact, largely thanks to this issue and waning demand for the
stock following a so-so earnings report, shares of Tesla Motors
have entered crash territory, falling by nearly 30% in a month. The
stock even fell below $120/share towards the end of November,
representing a huge fall from its 52 week high that was at
The company has started off December on a better note though,
especially following the results of a German regulatory
investigation into the issue. In the release, the
German body found no manufacturer-related
, and Tesla said that it was notified that the regulators were
closing their investigation and would take no further action.
Shares of the electric car maker soared followed this report,
jumping by nearly 15.5% at one point during the day on volume that
was roughly double the norm. Undoubtedly at least part of this bump
was thanks to some short-covering, but investors do have to be
feeling a lot better about Tesla following this news release.
TSLA also saw some good news on the analyst front too, as
Morgan Stanley's Adam Jonas reiterated his
on the stock. He also declared that the company was his top pick
out of his 26 stock coverage universe in the automotive sector,
further helping the bullish case for TSLA in Tuesday's trading
Smooth Ride Ahead?
Investors should note that Tesla isn't in the clear just yet
though, as an
investigation is coming from the U.S. National
Highway Traffic Safety Administration
, and Tesla's response on a series of record requests from this
organization is due by January 14
. Obviously if there is an issue with the U.S. investigation into
the fire we could see a big slump in TSLA shares going forward.
Earnings estimates for TSLA have also been dropping like a stone
over the past few weeks too, with the consensus estimate for the
current quarter plunging to a loss of four cents a share from a 20
cent profit per share 90 days ago. Current year and next year
estimates aren't any better, while TSLA currently has a Zacks Rank
#3 (Hold), so there may still be plenty of bumps along the way.
I find the German investigation results very encouraging for TSLA
as some were calling for a recall of the Model S based on the few
fires which had taken place. A clean bill of health from the
Germans-who are pretty much known for their cars-has to inspire
confidence in a lot of people, and should hopefully help to put
this issue in Tesla's rearview mirror, and boost the stock to the
prices it was seeing a few months ago.
But what do you think?
Are the positive investigation results and the analyst optimism
enough for you to feel bullish on TSLA once more? Or does TSLA's
run so far, and the looming U.S. investigation make you want to put
the brakes on adding this stock to your portfolio?
Let us know in the comments section below!
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