Tesla Motors Inc (NASDAQ:TSLA) stock tanked on this afternoon’s market. Investors have been looking around for the impetus for the crash. A report form Baird published earlier today may be responsible for some of the pessimism about the stock. Pessimism led to the company opening lower today and falling through trading until about 14:30 EST when the stock began to lose value rapidly.
The report, which was authored by Baird analyst Ben Kallo, was not negative on Tesla Motors Inc (NASDAQ:TSLA) at all. It suggested that the party was over for shareholders and put a Hold rating on the stock. The idea that Tesla might be over its inflationary growth may have caused investors to get out in order to lock in gains.
David Einhorn's Greenlight Capital funds were up 11.9% for 2021, compared to the S&P 500's 28.7% return. Since its inception in May 1996, Greenlight has returned 1,882.6% cumulatively and 12.3% net on an annualized basis. Q4 2021 hedge fund letters, conferences and more The fund was up 18.6% for the fourth quarter, with almost all Read More
There are several factors that led to the change in opinion at Baird, but most seemed related to the company’s massive stock valuation. According to the analyst, sentiment has changed among investors. They are taking a wait and see approach rather than buying more for growth.
Tesla Motors Inc (NASDAQ:TSLA) has seen significant price appreciation that has limited the upside in the stock, according to Kallo. The company’s technology advantage, along with its brand advantage and ecosystem have all been priced in as having better than projected results in the coming quarters. That leaves investors with little reason to drive the value of the company up.
Beating Model S and Model X production is already priced into Tesla Motors Inc (NASDAQ:TSLA) stock, according to Kallo. The Baird report put a price target of $187 on Tesla stock, though it has been trading below that since the drop in value earlier today.
Tesla bubble burst
The share price of Tesla Motors Inc (NASDAQ:TSLA) may rebound tomorrow when investors have time to take in all of the available information, or it may stabilize. The security has already found resistance at $176, likely due to a large amount of buy orders in or around that price. Today may not be the end of the Tesla Motors Inc (NASDAQ:TSLA) bubble, but it’s about as close as the stock has come.
The problem for investors is whether or not today’s drop will induce a panic sell tomorrow or later on today once investors get the facts together. Investors with a large proportion of their portfolio in Tesla Motors Inc (NASDAQ:TSLA) are in dangerous territory.