Tesla Motors (TSLA - Analyst Report)
has easily been one of the top stocks in 2013. The electric car maker started the year with a share price of about $35 and saw just over $193 to end September. This represents a return of nearly 450% in just the first nine months of the year.
However, some headwinds are finally starting to appear for this high flying stock. While there was a recent cut from Baird (Outperform to Neutral) on Tesla, the real news was when a model S was engulfed in a fiery crash, as the video of the incident spread across the internet.
While the details of the crash are still being investigated—some seem to believe that it was staged to drive down TSLA prices—many investors aren’t taking any chances, pushing the stock sharply lower. In fact, Tesla shares were off more than 6% today, pushing their performance to over a 10% loss just since the start of October.
Is this incident and the frothy valuation for TSLA (forward PE of 875) finally enough to make investors give up on the stock and send it lower?
Before you say yes, it is important to keep in mind that TSLA still has a Zacks Rank #1 (Strong Buy), and that it is in solid company from a Zacks Industry Rank perspective. Estimate revisions remain relatively positive for the company, while the current year consensus has surged from a loss of 68 cents a share, to the current level at 21 cents a share.
Still, the recent price action in TSLA is certainly troubling, and the latest bout of news hasn’t helped matters either. Plus, the bad press from the fire (assuming this becomes an issue) and the Baird downgrade could help push estimates lower in the near term, possibly knocking Tesla out from its #1 Rank.
But what do you think? Are Tesla’s best days behind it, or is this an interesting buying opportunity for a top ranked stock?
Let us know in the comments section below!
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