Another Uh-Oh IPO

It sure didn't take long for Tesla Motors (Nasdaq: TSLA) to shift into reverse.

The electric-car maker that dazzled the market with its IPO last week is now officially a busted IPO after closing below its initial price yesterday. It headed even lower this morning.

There certainly was plenty of buzz behind the Wall Street debut of the company behind stylish but pricy zero-emission cars. Tesla bumped up the number of shares it was offering and priced its freshly minted shares at $17 apiece, comfortably ahead of the original $14 to $16 range.

The mania was just getting started. The stock closed 40% higher on its first trading day, briefly breaking through $30 at one point the following day. It was a gravity-defying feat for Tesla, since the market was tanking at the time.

Shares have been rolling downhill ever since.

Sadly, Tesla isn't the only IPO to come blazing out of the gate like a rodeo bull, only to be mauled by the bear.

Hot starts cool off quickly
The IPO pipeline isn't exactly gushing these days, especially after the market rally that began in March of last year came to a screeching springtime halt.

Many companies have had to postpone their debutante balls or send underwriters packing for keeps. The limited supply of fresh meat has helped spark interest in some of the new names, but it's been hard for the one-day wonders to live up to their rocking initial impressions.

Let's go over five of this year's IPOs with the healthiest opening-day gains. See if you can spot the gruesomely obvious trend. 

Source: Hoover's IPO Central, Yahoo! Finance.

Shares of retirement planning specialist Financial Engines lead the pack with their 44% surge on its first trading day. They have gone on to give back nearly all of those gains.

It gets even uglier after that. The other four stocks -- recipients of opening-day gains between 15% and 34% -- have gone on to give all of those upticks back.

And then some.

They join Tesla Motors as "busted" IPOs, a name given to new stock offerings that break below what their first public investors paid for them.

Fixing the broken
No one is happy when IPOs go underwater. Underwriters look greedy. Their choice clients that seemed so grateful to get in on the offerings grow ungrateful.

However, if we're talking about quality companies with fundamentals intact, busted debutantes can turn into lucrative investing opportunities.

Webhosting giant Rackspace (NYSE: RAX) went public two summers ago. It had to settle for a $12.50 price after its initial pricing range had the shares fetching as much as $16 apiece. Even the $12.50 starting line proved to be overly optimistic. Rackspace opened at $10 and went on to meander in the single digits for months. It bottomed out at a mere $4 last February. It now trades comfortably in the high teens.  

I dissed Tesla Motors last week, just as its stock was peaking. I felt the mania was overdone for an unproven company that is likely still years away from profitability. I wasn't alone.

However, I also took advantage of this morning's bust to put in an outperform rating on the stock in the Motley Fool CAPS rating service. I still think it's a lottery ticket, but now that it's trading for roughly half of last week's peak, it's a considerably cheaper lottery ticket.

The challenges are real for Tesla. It will need to be successful with its more accessibly priced sedan in two years. It will also have to stand out from a market that is quickly ramping up the production of fuel-efficient hybrids and electric cars.

However, there is some degree of comfort in buying into a story stock where the potential long-term promise is still largely intact. Paying less than what a chagrined underwriter's best accounts had to fork over is just a showroom steal.

Can Tesla Motors get cheap enough for you, or is it headed to zero? Share your thoughts in the comments box below.