The Bear Roars For Tesla As Stock Surge Burns Out

Cameron Aubernon
by Cameron Aubernon

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.

Photo credit: Fir0002/ Wikimedia Commons/ CC BY 2.5

Cameron Aubernon
Cameron Aubernon

Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.

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  • Old Man Pants Old Man Pants on Nov 01, 2013

    @xerenar You used a funny word. I looked it up. Now I want one so I can carry hash and a pebble pipe around in public and who's going to question it? Especially with the beanie on, too.

  • Amca Amca on Nov 02, 2013

    Autoextremist.com is reporting auto industry gossip on what's up with the fires: Tesla single wraps its batteries. GM, thorough, plodding GM, triple wraps its batteries against the danger of "piercing" in impacts, which leads to fires. (Don't ask me what the wrapping refers to. Anyone know what that'd be?) Tesla went a little quick and dirty. And now their cars have a congenital, probably unfixable defect. GM, with a little more experience in the field, took a more expensive, more conservative approach. Maybe experience does count for something in the auto biz.

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    • Beerboy12 Beerboy12 on Nov 02, 2013

      Also keep in mind the Volt does not have the ability to come even close to the speed, the Model S vehicles involved in the fire crashes were doing at the time of each of the two crashes. There is just no comparison to be made.

  • Beerboy12 Beerboy12 on Nov 02, 2013

    In my opinion the stocks were overvalued so I do not view a drop in value as anything to fly into a blind panic about. Other manufacturers stock prices fluctuate as a result of knee jerk media hype all the time. I think the market and to be honest, people, even some bright sparks here in the B&B are perhaps a bit gun shy and here is why. Jeep's fuel tank fire crash issue, Volts that burned while parked, Ferrari's that exploded into flames and Toyota's that randomly accelerate with terminal break failure. These are admittedly bigger companies but not all of them secure though. Those are all serious issues leveled at them, Jeep especially. Tesla has a great product, this cannot be argued because of high customer satisfaction, exceptional crash test results and growing popularity. These fires are as a result of extreme collisions and not due to everyday faults. The product has been around for long enough that everyday problems, especially safety ones, would be evident by now. Lets see were this goes, me, I don't see any reason to panic, not yet anyway.

  • Old Man Pants Old Man Pants on Nov 03, 2013

    What an awesomely iconic photo! Symmetric flames & e'ythang. Just made it wallpaper on my work computer. I want T-shirt!

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