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Tesla Roadster, version 2.5  (Source: Tesla Motors)

Tesla Model S Prototype  (Source: Tesla Motors)
Losses are significant, even considering the downward-trending market

It's been a wild ride for Tesla Motor company enthusiasts.  After months of eager anticipation, the company became the first automotive public offering since Ford in 1956, and dumped 15.3 million shares onto the market aggressively priced at $17 (2 million of these shares were sold late, via an over-allotment option).  

That high price turned out to be an early victory for investors, who saw share prices spike up to a peak of 30.42 last Wednesday -- a gain of 78.8 percent.  However, those gains have since been erased as TSLA has taken a sharp plunge on the stock market.  The stock now sits at 15.50 (at press time), well below its IPO price.

The stock market as a whole has been struggling over the last week, with the DOW Jones Industrial Average dropping last week into the 9000s after poor job reports.  For an unproven company like Tesla that particularly spelled trouble.  

Josef Schuster, the Chicago-based founder of IPOX Capital Management LLC and manager of the Direxion Long/Short Global IPO Fund comments, "The company is a great concept with relatively weak fundamentals.  Markets are weak and in a weak market right now this is hurting the company even more."

Despite having one of the first true electric vehicles on the U.S. market -- the Tesla Roadster, recently update to "Version 2.5" -- and several upcoming vehicles, investors are finally falling out of love with the company and taking a hard look at its financials.  Tesla lost $29.5M USD in Q1 2010 -- almost double what it lost in that quarter last year, and over half of what it lost 
overall last year ($55.7M USD).

Electric vehicles have received a firm monetary and public commitment from U.S. President Barack Obama.  Tesla faces tough competition in the near future, from entry-level competitors like GM's 2011 Chevy Volt and Nissan's 2011 Leaf EV.

However, it'd be premature to write off Tesla entirely.  Its Model S entry-level luxury EV looks promising, if it can keep costs contained.  It also has a key new contract with Toyota to help the Japanese automaker develop electric vehicles.



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Pump n' Dump
By guacamojo on 7/7/2010 11:20:17 AM , Rating: 5
No surprise here. The initial surge was largely driven by speculators pumping up the stock. Then when the getting was good, they dumped it.

The company got what it wanted (a bunch of cash.) The speculators who got out got what they wanted. (Right, "therealnickdanger"?) The IPO agent got his fees, the brokers got theirs.

The only losers here were the sheeple who really thought TSLA was a good investment at $30.

Part of me says it's only fair for people to get taken like that. The other part of me wonders if there shouldn't be minimum holding times on stocks to prevent the good ol' pump n' dump.

Of course, it's pretty much the same thing as concert or sports tickets getting bought up by speculators and resold for big bucks. What's the difference?




RE: Pump n' Dump
By IcePickFreak on 7/7/2010 1:25:47 PM , Rating: 2
No doubt. In the DT article last week about the IPO I pretty much called this out, but I gave it a year. I thought they'd play along longer that a week lol.


RE: Pump n' Dump
By JediJeb on 7/7/2010 2:03:42 PM , Rating: 4
I think the term "investor" should be replaced with the term "gambler". When you invest in something you are trying to make an improvement in what you are investing in which will pay you back in the end, usually over a long period of time. Taking money, throwing it on the table and hoping the right number comes up to make it into more money, that is gambling.


RE: Pump n' Dump
By smilingcrow on 7/7/2010 6:56:02 PM , Rating: 2
"Of course, it's pretty much the same thing as concert or sports tickets getting bought up by speculators and resold for big bucks. What's the difference?"

The first part of your analysis seemed spot on but the comparison with touting seems very ill founded.
People buy from touts because an event was sold out and they want to go to that event. They aren’t buying the tickets as a potential investment; it’s a very different dynamic.


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