Shares in electric car company Tesla cratered today, dropping over 7 percent by the end of regular trading. The company’s equity managed a partial recovery by the end of the day, leaving its intra-day lows behind.
Why the drop? Tesla lost a coveted Consumer Reports recommendation and was given a “worse-than-average” rating in its place. The reason? Tesla’s Model S sedan reportedly experienced an “array of detailed and complicated maladies.” As we reported earlier, the “main problems,” involve the drivetrain, power equipment, charging equipment, its touch-screen center console and various sunroof issues, including leaks. Having said that, the Tesla S still got high marks on responsiveness and repairs, so the market reaction might actually be a bit of an overreaction.
Tesla has long been a darling of the technology world. Even after its recent declines, Tesla is worth north of $25 billion, valuing it well north of Twitter, for example. Shares of the company peaked this summer, cresting the $280 mark. Today, Tesla nearly traded for a flat $200.
The company recent announced a new vehicle, a luxury SUV that will cost around $130,000. The SUV, called the Model X, was so hard to build that Tesla CEO told the press that he was “not sure anyone should have made [it].”
Be that as it may, Tesla has long been a company that has grown on the strength of the Model S. To see that key driver of income dinged therefore matters more than you might expect.
Tesla has its fair share of financial detractors. The company’s explosive revenue growth that propelled it from 2011 through 2014 have slowed. In fact, according to data compiled by Google Finance, Tesla has seen essentially essentially stagnant revenue growth in the last three quarters, coupled to increasing losses.
The car company reports its third quarter results on November 3.