Tesla (TSLA) Stock Falls, Recalling 90,000 Model S Sedans Over Seat Belt Issue
NEW YORK (TheStreet) -- Tesla Motors (TSLA) - Get Report stock is tumbling 2.29% to $216.72 on Friday as the electric car maker is voluntarily recalling 90,000 Model S sedans to check if the seat belts are working properly, the Associated Press reports.
The move comes after one Model S experienced a seat belt malfunction in Europe, where the driver's seat belt came loose since it was not properly connected to the outboard lap pretensioner.
The driver was not involved in a crash, there were no injuries, and no other reported incidents since then.
In a letter to Tesla customers, the company said that so far it inspected 3,000 Model S vehicles after the problem was reported.
Due to the possible manufacturing error, Tesla is offering customers vehicle inspections.
This is the largest recall in the company's history, the AP said.
Separately, TheStreet Ratings team rates TESLA MOTORS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate TESLA MOTORS INC (TSLA) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 10.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 36.49% is the gross profit margin for TESLA MOTORS INC which we consider to be strong. Regardless of TSLA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TSLA's net profit margin of -24.53% significantly underperformed when compared to the industry average.
- TESLA MOTORS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TESLA MOTORS INC reported poor results of -$2.36 versus -$0.71 in the prior year. This year, the market expects an improvement in earnings (-$1.12 versus -$2.36).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Automobiles industry. The net income has significantly decreased by 207.7% when compared to the same quarter one year ago, falling from -$74.71 million to -$229.86 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Automobiles industry and the overall market, TESLA MOTORS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: TSLA