Tesla Gives Investors Another Reason to Pump the Brakes

Before you go, we thought you'd like these...
Before you go close icon

Source: Tesla

It's been a wild ride for Tesla investors recently. From a bogus class action suit and an investigation into two Model S fires to the looming threat of a recall, Tesla can't seem to catch a break these days. The stock crashed last week as a result, with shares falling to $119.22 on Tuesday which was more than a 38% dip from the stock's 52-week high of $194.50. On Friday, shares were still trading off their highs at around $120.

Tesla's already lost nearly a third of its market value over the past month because of concerns over third-quarter deliveries of its Model S cars and recent fires. Tesla delivered 5,500 Model S vehicles in its fiscal third quarter, beating its own forecasts for the period. However, Wall Street is worried about deliveries in the current quarter after Tesla's CEO Elon Musk warned that the company remains production constrained because of a lack of battery cell supply. Tesla now expects to deliver just under 6,000 Model S cars in its fourth quarter.

Separately, the stock could continue to struggle as news trickles out about the surprising departure of Tesla's vice president of worldwide sales, George Blankenship. To be clear, Tesla has not yet confirmed these reports. However, the Mercury News says that Blankenship left the EV maker to "spend more time with his family, including four grandchildren."

Let's take a closer look at what Blankenship's exit means for both Tesla and its shareholders.

Reinventing retailing, from Mac to Model S
Blankenship's 10-year history as Apple's real-estate chief made him a perfect fit for Tesla as the Silicon Valley-based automaker unveiled its disruptive retail strategy of selling cars directly to consumers. Since joining Tesla in 2010, Blankenship has been in charge of opening Tesla showrooms in malls throughout the United States, Europe, and Asia.

Much like his previous role at Apple, Blankenship has been an integral part of Tesla's retail strategy, which aims to forever change the way people shop for cars. Blankenship helped Apple open its first retail store in 2001, at a time when everyone said Apple's retail concept would fail. Today, there are more than 300 Apple stores worldwide. Tesla, too, is growing its retail footprint and now has 47 stores in the U.S. and Canada, 22 in Europe, and four in the Asia-Pacific region.

Earlier this year, Blankenship had reportedly been tasked with Tesla's international retail store expansion. But according to his LinkedIn profile, Blankenship left Tesla in November. Moreover, the San Jose Mercury News reported that his online resume on the networking site reads: "November 2013: done at Tesla."

Source: Tesla

It's no secret that I'm a longtime Tesla bull. But one of the reasons I decided to buy shares of Tesla in 2011 when it was the most shorted stock on the Nasdaq was because of the company's open and transparent communication with investors. I'm surprised Tesla hasn't put out a press release about Blankenship's decision to leave, particularly if it was indeed because he craved more family time. For Tesla shareholders, the immediate concern is the lack of transparency from Tesla on this issue. Not only has Tesla not publicly mentioned Blankenship's exit, the company still has him listed as its VP of sales and ownership experience on its website.

Up to this point, Tesla has been open and transparent about everything from lawsuits against its retail strategy to fires in its Model S. There's no doubt that Tesla will find a worthy replacement for Blankenship, and perhaps the company will disclose more information about his exit at that time. But for now, leaving investors in the dark could mean more volatility in the stock.

Finding growth beyond Tesla
Finding truly wealth-changing stocks doesn't need to be challenging. Now you can unlock six of The Motley Fool's top stock picks for ultimate growth in this free report: "6 Picks for Ultimate Growth." Stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio -- it's free today. 

The article Tesla Gives Investors Another Reason to Pump the Brakes originally appeared on Fool.com.

Fool contributor Tamara Rutter owns shares of Apple and Tesla Motors. The Motley Fool recommends Apple, LinkedIn, and Tesla Motors. The Motley Fool owns shares of Apple, LinkedIn, and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

People are Reading