Tesla Motors Inc (NASDAQ:TSLA) is one of the most phenomenally successful companies of 2013. The firm's stock price has risen by more than 250 percent since January 1, and the Tesla brand is quickly becoming a household name. All of that optimism hit the firm's stock hard today after a report from Goldman Sachs Group, Inc. (NYSE:GS) burst the bubble of many investors.
The report from Goldman Sachs Group, Inc. (NYSE:GS) was not a particularly negative one, though it did put the price targets for Tesla Motors Inc (NASDAQ:TSLA) well below those offered by most other analysts. At time of writing Tesla stock had fallen more than 5 percent to $120.77 per share.
Bursting a bubble?
The problem with such a highly valued company is that there is a large amount of investors who have made incredible gains off of the stock who are still holding onto it. These investors don't want to lose the money they've made off of the back of the electric car company. Any tremor in the stock price has the potential to cause a rupture like that seen today.
If a couple of days trading go against the electric car company, its momentum could be stopped dead, at least until its next announcement of earnings. The company will announce earnings for the quarter ending June 30 next Monday, July 22.
Tesla Motors - Bear Case
The average price target from the Goldman Sachs report released today sat at $84. That number is an average of the bear, baseline and bull cases which had price targets of $58, $83 and $113 respectively. One report does not decide the markets opinion, but the reaction of traders today shows that Tesla Motors Inc (NASDAQ:TSLA) stock may be headed for more volatility or a collapse if the bear case holds true.
Some Tesla investors really believe in the electric vehicle company, whether or not they believe in it enough to risk their investments is being tested right now. It's clear that a large number of them are not willing to bet on the company, at least not at this price level.
Tesla Motors Inc (NASDAQ:TSLA) has a much more convincing bear case than bull case right now. Whatever your feelings about the company, it's a lot easier to see shares losing 30 percent by the end of the year than it is to see them gaining the same margin.
Goldman Sachs Group, Inc. (NYSE:GS) has just exposed a weakness that was already present in Tesla stock.