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Thursday, October 3, 2013

TESLA MOTORS | Stock of the Day - 10/3/13 | The Motley Fool

Shares of Tesla Motors have sold off sharply over the past two days, due both to a downgrade from "buy" to "hold" coming from an analyst at R. W. Baird, and to the release of an internet video, showing a Tesla Model S in flames following an accident.

In this video, Motley Fool analyst Tim Hanson sits down with host Chris Hill, to discuss whether the sell-off is a buying opportunity in his eyes. Tim tells investors how he sees the stock price as having become disconnected from the fundamentals of the business, and far too optimistic even for a company of this potential. He still sees Tesla as being far too expensive, even after the sell-off.

Tim also discusses the idea of headline risk, and how stocks surrounded by so much market optimism can become priced to perfection. He notes that with stocks such as Tesla, tiny events in the news can cause large fluctuations and heavy volatility in the share price, something he prefers to avoid. Tim closes by telling investors that for current shareholders that have enjoyed a great run with the stock thus far, there may be a couple reasons to lighten your Tesla holdings coming on the horizon.

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