3D Systems Corporation Stumbles 11% and Tesla Motors Slapped With Junk Credit Rating
The Dow Jones Industrial Average isn't finding much direction today, trading a mere 10 points lower, or 0.06%, at midafternoon during a holiday-shortened week with low trading volumes. As key indexes continue to test record highs, Jim Paulsen, chief investment strategist at Wells Capital Management, remained optimistic when speaking to Reuters.
"Economic momentum is clearly to the upside at the moment, the surprise index is up and that's pretty powerful for stocks," Paulsen said, referring to Citi's Economic Surprise Index. "We've had a constant stream of better than expected data and the bond market has remained supportive."
With that in mind, and with key economic indicators due out Thursday and Friday, here are two companies making headlines in the markets today.
Outside the Dow, 3D Systems was down 11% after the company announced a secondary share offering Tuesday after the market closed. Within 30 days of the announcement, 3D Systems will offer an additional 5.95 million shares and potentially an additional 892,500 shares to its underwriter to help the company keep up a growing number of acquisitions that already totals more than 50 over the last three years.
While investors were seemingly turned off by the announcement, as the stock is trading off more than the diluted offering effect ranging between 5.7% and 6.6%, long-term investors seeking an upside can look back to the company's 30% gain since it offered 7.5 million shares last May.
In other industrial news, Tesla Motorshas to like the BMW Group projection that China will become the world's top market for electric vehicles in no more than five years, as reported by Bloomberg. China has fallen far behind its goal of reaching 500,000 electric vehicle sales by 2015; sales have to date failed to top 70,000.
Tesla just recently began sending its Model S into China, but it is far from the only company eyeing the EV market in the nation. Volkswagen intends to launch more than 15 electrified models in China by 2018 and BMW expects to sell the i3 in China by September, according to Bloomberg.
Growing competition in the electric-vehicle segment is one reason that Standard & Poor's recently slapped Tesla's credit rating with a B-, six levels below investment grade.
"We believe there is considerable uncertainty in Tesla's long-term prospects," S&P wrote in the report, according to Los Angeles Times. The Palo Alto company is less likely "to successfully adapt to competitive and technological displacement risks over the medium to long term," according to the analysis.
This low credit rating could make it more expensive for Tesla to borrow money to fuel growth, but in reality likely changes little for its long-term prospects. Furthermore, while Standard & Poor's concerns are valid, there's no question that Tesla is currently a step ahead of any other automaker in the electric-vehicle segment. While competitors scramble to catch up to the quality and performance standards set by Tesla's Model S, Tesla is gearing up for its 2015 launch of its Model X, which is expected to take sales and revenue to new heights for the young automaker.
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The article 3D Systems Corporation Stumbles 11% and Tesla Motors Slapped With Junk Credit Rating originally appeared on Fool.com.Daniel Miller has no position in any stocks mentioned. The Motley Fool recommends 3D Systems and Tesla Motors. The Motley Fool owns shares of 3D Systems 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.
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