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Tesla (TSLA) Motors Hit with Lawsuit Drops to 4 Month Low

By: , dated November 19th, 2013

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 Californiaâ 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 carâ s undercarriage and lithium ion battery pack. Essentially, the suit alleges that the carâ 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 companyâ s recent earnings also fail to justify the companyâ 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 Company answers to recent safety issues. Other Stocks in the News J.P. Morgan to pay $4 bln in consumer relief Sony expects to sell 5 million PS 4s by March 1st. Twitter shares head south 7% Stock slides along with other social media stocks. Copyright 2013 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Jay Hawk Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

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