Tesla Motors Inc (NASDAQ:TSLA) Shares Take A Hit

Tesla Motors Inc (NASDAQ:TSLA) took a hit of over 3% after an analyst downgraded the stock due to concerns over the commercial viability of its new Model X. Andrew Fung, an analyst downgraded Tesla as ‘underperform,’ down from ‘outperform’ and raised doubts over the short term earnings of the new electric cars fielded by Tesla. The stock of the company has fallen by over 12% this year due to waning investor confidence. The loss of confidence is due to a host of issues ranging from the price and commercial viability of the new Model X. Another concern has been the placement of recharge station at convenient places so as to be in the range of the car’s battery.

Have analyst identified a ongoing trend in TSLA?

Other auto companies like BMW are also coming up with plans to release their electric cars. It is also unknown how much a true electricity car will be appreciated by the consumers especially considering the hefty $70,000 it charges for the current model S. Though Model X will have a price tags half that of the Model S, it is still not easy on pocket. Shaky earnings and tumbling oil prices have had a negative effect on the maker of electric car.

On the bright side of things, Tesla Motors Inc (NASDAQ:TSLA) is a market leader in innovation. Elon Musk led company has gotten thumbs up from Research firms like Consumer Reports and J.D. Power. The Model X is highly anticipated and is expected to revolutionize the auto market. Even after this steep slide, Tesla recently traded at a lofty 232 times expected 2015 earnings, making it 11 times as expensive as the average NASDAQ stock. Since the beginning of 2013, when sales of Tesla’s Model S sedan took off and the company turned its first (and so far only) quarterly profit, its stock has returned almost 480%.

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Stinson is US Markets Daily’s Senior Producer for News & Public Affairs.

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