Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Shares of Tesla Motors (NASDAQ: TSLA ) dipped 4.2% on Wednesday, touching a daily low of $138.67 as the market took back some of yesterday's gains. On Tuesday, the stock gained an impressive 17% after a German probe into Tesla's recent Model S fires found "no manufacturer-related defects." Additionally, an upgrade from Morgan Stanley also helped boost Tesla's stock yesterday. Unfortunately, Tesla lost some of that momentum today. Nevertheless, here's why today's slowdown isn't entirely surprising.
More uncertainty ahead
It's encouraging to see the German authorities publicly stand behind the safety of Tesla's cars, particularly after the negative press the company received because of the Model S fires. But it doesn't change the fact that the National Highway Traffic Safety Administration, or NHTSA, is still investigating Tesla's Model S in the United States.
Moreover, today's dip is likely tied to the NHTSA's recent request for more details from Tesla related to these incidents. Tesla now has until Jan. 14, 2014, to supply the NHTSA with additional information, such as records of consumer complaints and property damage claims. To be fair, these types of requests are routine in NHTSA safety investigations. Still, the stock may continue to be volatile from here.
How to play it
Conservative investors may want to remain on the sidelines for now, at least until the NHTSA has made a decision regarding a possible Tesla recall.
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