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The Downs and Ups of Tesla's Stock

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author photo by Autotrader December 2010

Tesla Motors, the company we all learned to love for its highly energized electric car, is taking a turn for the worst. Just to perk your memory, the Tesla Roadster Sport has a 0-60 of 3.7 seconds and a range of 240 miles. And it’s 100% electric!

The downside is that on December 27, Tesla’s shares fell 15% to $25.55, the sharpest drop since July 6. But, historically the stock has been unpredictable. Since it’s offering last June, the stock has jumped from a high of $36.42 to a low of $14.98.

Initially, Tesla defied gravity with its blockbuster IPO – a $17 June offering that catapulted 40.5 percent in the first day of trading – a dashing debut on the same date that Nasdaq and S & P had their worst days of the year. At the time, the industry was questioning whether Tesla’s high price would outlast the lock-period. As explanation, Tesla’s selling stockholders, directors, officers and employees are subject to a lock-up period for 180 days after the IPO. The lock-up is done to prevent the stock from flowing too quickly into the market.

In answer to the question of whether the high would survive, apparently it didn’t. When the lock-up expired at the end of December, allowing investors to sell for the first time since the company’s June 28 initial offering, the stock took a dive.

“Other holders may have sold in anticipation of insiders’ sales,” explained Carter Driscoll, senior analyst for clean technologies with Capstone. Capstone Investment’s expectation is that plug-ins and other types of hybrids will continue to outsell electric cars like Tesla.

“A lot of it is the lock-up expiring,” Driscoll said on December 27. “A lot needs to go right to justify the current valuation. They have never mass-produced cars. They start paying back government loans in 2012.”

The Department of Energy loaned Tesla $465 million in March, a portion of which goes towards developing its second electric car, the Model S sedan due in 2012. Panasonic, one of the world’s largest manufacturer’s of rechargeable batteries, made a $30-million investment in November.

Toyota and Daimler have each invested around $50 million. But, Tesla CEO Elon Musk remains the company’s biggest shareholder.

Driscoll said he doesn’t expect Tesla to report a profit or positive earnings before interest, taxes, depreciation and amortization until 2013. His long-term price estimate is $22 a share.

As of this writing –December 30, 2010; 12:12 PM EST–it looks like Tesla could be in the game again. The last tick was 26.94.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
The Downs and Ups of Tesla's Stock - Autotrader