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Why Tesla Motors Inc. Stock Heated Up

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Tesla Motors (NASDAQ: TSLA  ) got a jolt today, finishing up 16% after management bumped up its guidance for the fourth quarter of 2013.

So what: The maker of high-end electric cars said that sales in the final quarter of last year were "the highest in company history by a significant margin," as it sold and delivered nearly 6,900 vehicles, beating its own prior guidance by 20%. The company also said that the two key drivers of the increased demand were "the superlative safety of the Model S and great performance under extremely cold conditions."

Now what: Shares of Tesla continued to gain after hours, climbing an additional 3% on enthusiasm for increased sales. The carmaker's shares soared through most of 2013, but hit a speed bump on concerns about engine fires. Those seem to have been assuaged, though, as weeks ago the German vehicle safety regulatory authority approved the Model S, and CEO Elon Musk has been vigilant in his defense of the car's safety, taking every public opportunity to take critics to task. While Tesla continues to knock sales projections out of the park, there is still a strong argument that the stock is overvalued. At a forward P/E of 108, there are enormous expectations baked in. Musk intends for the carmaker to be a transformational company, and investors will need him to pull that off for the stock to move significantly higher.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 15, 2014, at 10:39 AM, ematzen wrote:

    Battery fires, not engine fires. Probably a moot point with regards to the article purpose.

  • Report this Comment On January 15, 2014, at 8:24 PM, Haggy wrote:

    Battery fires, and they didn't ht a speed bump. It was a case of the stock price not having anything to do with the value of the company, based on the reactions of people who knew nothing about the issues.

    The company itself knew what was going on and knew there was no issue.

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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