Tesla Motors Gets Burned

Shares of Tesla Motors (NASDAQ: TSLA  ) have sold off sharply over the past two days, due both to a downgrade from buy to hold from an analyst at R. W. Baird, and to the release of an Internet video that shows a Tesla Model S in flames following an accident.

In this video, Motley Fool analyst Tim Hanson sits down with host Chris Hill, to discuss whether the sell-off is a buying opportunity. Tim tells investors how he sees the stock price as having become disconnected from the fundamentals of the business, and overly optimistic even for a company of this potential. He still sees Tesla as being far too expensive, even after the sell-off.

Tim also discusses the idea of headline risk, and how stocks surrounded by so much market optimism can become priced to perfection. He notes that with stocks such as Tesla, tiny events in the news can cause large fluctuations and heavy volatility in the share price, something he prefers to avoid. Tim closes by noting that for current shareholders who have enjoyed a great run with the stock thus far, there may be a couple reasons on the horizon to lighten your Tesla holdings.

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  • Report this Comment On October 03, 2013, at 2:28 PM, RRobertsmith wrote:

    the only people getting burned are the ones not burn more stock on this slight pull back

  • Report this Comment On October 03, 2013, at 5:13 PM, jetamerica wrote:

    I can count the number of times I have shorted stocks on one hand in the last 35 years. TSLA is one of them-first first short at $152, my last one at $192. Overall a very small part of my portfolio.

    In my case it is really a protest vote against short term opportunism. I am an investor not a trader.

    Here is a company with a market cap at 20+ times its annual sales whereas companies like TM, F and GM and less than 1X

    And, not a single profitable sale. They sell to a small number of the very rich who receive massive Gov't assistance to buy their cars.

    I like the car, I even like the company-just believe it may be only a $40 to $45 dollar stock not close to $200.

    Ramping up to 500,000 units in several plants though 2016 with the need to market overseas with several models is a major endeavour. They may be able to achieve it some-or maybe not.

    Competition will not stand still in the interim

  • Report this Comment On October 03, 2013, at 6:53 PM, garrah wrote:

    I became aware of this stock via MF, in 5/13.. after some research, I could not see how it was advancing so fast, yes He is a genius but numbers are numbers. I started buying 5/28 at $88.80 and after each purchase, I put a STOP LOSS of maybe $2 less than purchase. I had a STOP LOSS of $190 on 10/1/2013 and haven't repurchased, but if I could find another stock that gave me $102 / share again in 4 months I would jump on it.

    I still will watch since he has the GOLDEN TOUCH !!!!!

    Thanks,

    Gary Bull

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