Tesla Motors Inc (NASDAQ:TSLA) stock is down around 17% in the past month indicating that the super car is no longer a super stock, says a report from 247wallst by Douglas A. McIntyre. There are a number of factors that might have pulled the prices down like rivals launching or announcing new cars, corrections in valuation, fight with auto dealers, etc. Whatever the cause may be, the fact remains that investor’s trust in the company has started to soften a bit.
New rivals coming in
Tesla’s engine fire probe in now a distant memory for the automaker as the National Highway Traffic Safety Administration (NHTSA) has withdrawn the probe into the fire incidents. The end of the probe again highlights the car’s impressive safety ratings, which also serves as its “primary sales appeal,” believes McIntyre. Other sales factors like quality, performance, etc are at “least as substantial as for any other car on American roads.”
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After witnessing the popularity of Tesla Motors Inc (NASDAQ:TSLA) Model S, many other automakers have announced plans to come up with similar products. A few of its rivals including Cadillac ELR from General Motors Co, use small gas-powered engines. Also, BMW’s i3 and i8 could emerge as a potential threat owing to the features in the electric car and brand name of the company.
Tesla one recall away from large sell-off
Many of the investors had questioned the valuation of Tesla Motors Inc (NASDAQ:TSLA), when the stock jumped from a 52-week low of $44.54 to $265.00. Presently, the shares trade at $193.91. Around 52% of the investors are bearish on Tesla Motors Inc (NASDAQ:TSLA), and short interest in the company is now almost 29% percent of the float, according to StockTwits. Presently, Tesla is most most-shorted stock on the NASDAQ 100.
When compared to GM’s market cap of $53 billion, Tesla has a market cap of $23.7 billion. GM, which is the biggest automaker in U.S., is expected to sell more than 9 million cars this year globally and that too amid recall problems.
Tesla Motors Inc (NASDAQ:TSLA) holds a lot of potential, and revenues could even double this year and the next, but the fact remains that it is still a niche player, “just one recall or one successful competitor away from a really large stock sell-off,” believe McIntyre.
In pre-market trading on Wednesday, Tesla Motors Inc (NASDAQ:TSLA) shares were up 1.01% to $193.91.