Tesla Motors Inc (NASDAQ:TSLA) has been a favorite among investors in 2013, but that may be changing. Tesla Motors Inc (NASDAQ:TSLA) stock drifted downward all day but began to lose value quickly this afternoon. At time of writing, the stock had traded down by more than 8 percent for the day so far.
The Tesla Motors Inc (NASDAQ:TSLA) bubble may have ended today, and the reason may be traced back to a single report, and the seed of doubt it planted in the minds of many investors. A Baird report published earlier today suggested that value growth was over at Tesla Motors for the time being.
The Baird report downgraded Tesla Motors Inc (NASDAQ:TSLA) from Outperform to Neutral because of the huge appreciation in the company’s stock. Though Ben Kallo, the analyst who authored the report, is still positive on the company, he believes that much of the future value has been priced in.
The report suggested that Tesla Motors Inc (NASDAQ:TSLA) had reached a value apogee as investors were looking to see how the company implemented its plans. Changes in the investment structure at the company may have helped to speed the fall in the value of the company’s stock.
Tesla and retail investors
The high valuation of Tesla Motors Inc (NASDAQ:TSLA), coupled with the 470 percent gains the stock made through yesterday and the approaching end of the year, mean that many institutional investors have probably bowed out of the company in order to lock in those gains. Individual investors have a reputation for chasing gains once they’ve already been made, and that may be what is happening to Tesla Motors Inc. (NASDAQ:TSLA) stock.
According to a new report from Bank of America Corp (NYSE:BAC), pension funds and other institutions have been getting out of the stock, which means that small retail investors might be picking up the slack. That could be dangerous, according to a CNN piece on the stock.
Tesla bubble about to burst?
This could be the beginning of the end for the Tesla Motors Inc (NASDAQ:TSLA) bubble. In today’s market, retail investors have access to high speed trading through the Internet, and that means turnarounds can happen fast with institutional investors already getting out of the stock.
The good news about the massive loss in value at Tesla Motors Inc (NASDAQ:TSLA) is that it will not affect the company itself. Tesla Motors and its stock parted ways some time ago, and the drop in the value of the stock is unlikely to have an effect on the company’s ability to secure financing or its ability to continue its expansion.
Tesla Motors Inc (NASDAQ:TSLA) stock may have lost value today, but Tesla the company has not. It will still continue to dominate the electric car industry and may one day dominate the car industry as a whole.