Arab Today, arab today fire takes froth off tesla shares
Last Updated : GMT 06:37:29
Arab Today, arab today
Arab Today, arab today

Fire takes froth off Tesla shares

Arab Today, arab today

Arab Today, arab today Fire takes froth off Tesla shares

Washington - AFP

A fire in a Tesla luxury sedan sent its shares sinking this week, leaving analysts debating whether the electric car maker\'s promise justified a 400 percent share price run-up. The widely seen video showed a Model S, Tesla\'s $75,000 marquee model, up in flames on a street near Seattle, Washington. According to reports, the driver said he believed he had hit a piece of metal and pulled off the highway, only to see the car erupt in flames minutes later. According to Tesla chairman Elon Musk, the piece of metal, likely from a semi-trailer, punched a three-inch (7.6 centimeter) diameter hole in the armor plate protecting the car\'s underside, leading to the fire in the front battery module. No one was injured, but the video revived worries that the spreading use of lithium-ion batteries poses dangers, as with those that forced the grounding of the worldwide fleet of Boeing 787s this year. Clearly aware of the negative impact of the video, company founder Musk argued in a statement on the company\'s website that, if the same thing happened to a conventional gasoline-powered car, \"the result could have been far worse.\" \"For consumers concerned about fire risk, there should be absolutely zero doubt that it is safer to power a car with a battery than a large tank of highly flammable liquid.\" Even so, the incident challenged Tesla, which has captured huge attention and praise for its all-electric sports and luxury cars, to demonstrate that it is, as many think, the future of an auto industry still only hesitantly moving into hybrid and electric vehicles. Tesla shares had run up 470 percent from January to a record $194.50 on Monday, before the video came out Tuesday and sent them tumbling to around $173. A rebound Friday pushed them back up to $180.80,  still 433 percent higher since the year began. That climb has put Tesla among the world\'s most valuable car companies despite expectations it will sell around 21,000 autos this year. The company\'s market value Friday was more than $21 billion, nearly one-third of Ford\'s, which sold 185,000 cars in September alone. That also put it at twice the market value of Italy\'s huge Fiat, whose US unit Chrysler delivered 143,000 cars last month. Investors believe Tesla has stolen a great march on the industry for the vehicle of the future. The Model S earned top test results from the influential Consumer Reports, top safety ratings from the National Highway Traffic Safety Administration, and was dubbed \"Car of the Year\" by numerous publications. In August Tesla turned in a stronger-than-expected second-quarter report, taking its revenues for the first half of the year to $967 million, compared with $56 million a year earlier. Still the company lost 17 cents a share, though excluding the impact of stock-based compensation and other one-time costs, it reported 33 cents a share profit for the half. The company continues to expand and demand for its cars far outstrips supply; it estimates global demand at 40,000 units a year. On August 22 Tesla opened its first assembly plant outside the United States in Tilburg, Netherlands, to serve European customers. It is building a network of \"supercharger\" stations around the United States to give drivers of its cars the ability to cross the country easily with the ability to quickly recharge the batteries. But analysts are becoming doubtful about Tesla\'s ability to keep its stock price charged at the current levels. Analysts at Robert Baird cut the stock from buy to hold this week, maintaining their price target at $187, saying all the coming possible good news on sales and new models was already represented in the price. \"This is an example of a stock that has become disconnected from the fundamentals of the business,\" said analyst Tim Hanson of investing website Motley Fool. Hanson pointed out that institutional shareholders have been cutting their holdings, leaving support to small retail buyers who have followed Tesla like a cult stock. John Ogg of 24/7 Wall Street said Tesla \"is not being valued for 2013 nor 2014 numbers.\" \"Elon Musk\'s electric car empire is a game being valued for 2016 or even 2020, just like Jeff Bezos and Amazon.com.\"

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