Why Tesla Motors Inc. Stock Jumped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Tesla Motors were revving higher today, gaining as much as 15% after its Model S sedan got an important stamp of approval in Germany.
So what: Germany's Federal Motor Transport Authority said that it had concluded a review of Model S fires, and found "no manufacturer-related defects." The decision comes after three fires had occurred with the electric cars in a span of six weeks, and as it is under investigation by the U.S. National Highway Traffic Safety Administration, or NHTSA. A finding of a defect could have led to a recall for the high-priced sedan. Tesla shares had been a tailspin lately on concerns about valuation and the recent fires, following a rocket-like gain earlier in the year, so today's news seems to bode well for concerns about the fires.
Now what: Clearance from the NHTSA could lift Tesla's stock further, and several analysts reiterated their bullishness in the stock following the news out of Germany, arguing that the fires should not cause material damage to the company. Two of the fires had been caused by debris, and one by a crash, and CEO Elon Musk responded to the criticism, saying that gas-powered vehicles are just as likely to experience fires. With its sky-high valuation, Tesla still looks too pricey for me, but it seems like today's report should help put the battery concerns to rest.
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The article Why Tesla Motors Inc. Stock Jumped originally appeared on Fool.com.
Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of 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.
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