Tesla CEO Elon Musk has noted on occasion — as recently as last month — that the price of his company's stock was overvalued, particularly in the short term. Seems Wall Street got the hint, bestowing upon the automaker the biggest one-month loss of market value in October since the last such occurrence in December of 2010.
The stock drop burned away $4.1 billion last month, bringing the market capitalization down from a peak of $23.5 billion at the end of September to a more reasonable — in the view of the investors and analysts — $19.4 billion; Tesla's current valuation is $4 billion. Causes of the drop include two incidents of the Model S catching on fire post-accident (the first fire near Seattle knocked 10 percent off the stock price for two days afterward), Musk's remarks about his company's stock valuation, and the potential end to massive revenues generated from zero-emission vehicle credits in their native California.
Though Tesla is still riding high for the most part, a number of challenges ahead — boosting production of their Model S for (hopefully successful) sales in Europe and Asia, the addition of the Model X SUV to the lineup, avoiding hazardous pitfalls in production regarding timing and quality, et al — could prove how durable the stock is, and whether or not more bears will gather at the gates ready to feast on salmon in the next two years.
from The Truth About Cars http://www.thetruthaboutcars.com
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