Tesla (TSLA) Motors Hit with Lawsuit Drops to 4 Month Low
Shares of Tesla Motors Inc. (TSLA) closed down -13.87 or -10.24 percent to $121.58 on Monday, the stock has not traded at this low a level since July. The sharp selloff began on November 5th and was in part attributed to a series of fires in three of the companyâ s S model vehicles, the first in early October and the most recent on November 7th. The selloff in Tesla stock continues on Tuesday in pre-market trading, with the stock off -4.27 or -3.51 percent to 117.31.
In addition to the S model fires, a class action lawsuit was filed on November 15th by Morgan and Morgan on behalf of investors who bought Tesla Motors common stock between May 10th, 2013 and November 6th, 2013.
Palo Alto, California based Tesla Motors Inc. produces two fully electric powered automobiles, the Tesla Roadster and the Tesla Model S. Both the Roadster and the Model S vehicles are the first fully electric sports car and luxury sedan ever produced. Tesla Motors also markets electrical components to other automakers such as Daimler and Toyota. These include electric powertrain components and lithium-ion battery packs used in electric and hybrid models. In addition to the three model S fires and the class-action lawsuit, the company also suffered an industrial accident at its Fremont, California plant. The accident, which occurred on November 13th, injured three workers by hot metal that resulted from failure of a low pressure aluminum casting press. The incident is currently under investigation by CaliforniaÃƒÂ¢ s Division of Occupational Safety and Health. The lawsuit, filed in U.S. District Court for Northern California accuses Tesla of making misleading statements in regard to the safety of its Model S vehicle. Also, the lawsuit alleges that the statements failed to reveal the fire and puncture risks in the carÃƒÂ¢ s undercarriage and lithium ion battery pack. Essentially, the suit alleges that the carÃƒÂ¢ s defects have led to fires in the battery pack in certain situations. Elsewhere, Tesla dropped the price of its Model S in Europe by $4,273 to $94,000. The price includes European Value Added Tax of 12,000 Euros depending on the country and whether concessions are made for environmentally safe vehicles. While the ten percent drop on Monday was severe, Tesla stock was trading in the low 30s just one year ago. The companyÃƒÂ¢ s recent earnings also fail to justify the companyÃƒÂ¢ s recent valuation of $20 billion, especially since Tesla has yet to record an annual profit. Also, many investors are bailing on the stock because of the end of the year and to lock in profits. Tesla stock hit a high of $193.97 per share on September 30th. The decline from there was gradual until November 5th, just before the third car fire. There is still substantial room for more corrective behavior after the run-up the stock has had this year, especially if stock prices in general begin falling. Other News About Tesla U.S. Regulator Opens Probe of Fire in Tesla Electric Cars
The U.S. National Highway Traffic Safety Administration announced the probe today. Tesla defends Model S safety as stocks plunge
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Published on Nov 19, 2013
By Jay Hawk