Tesla Drops as Electric Vehicles Less Appealing Amid Plunge in Oil Prices

Tesla is dented as the appeal of electric cars is dented by the plunge in oil prices.
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Shares of Tesla  (TSLA) - Get Report plunged Monday as the appeal of electric cars has been dented by the plunge in oil prices.

West Texas Intermediate, the benchmark U.S. crude oil price, has cratered 24% Monday to $31.47, pushing it down 36% for the last month. That will obviously make it cheaper for drivers to fuel gasoline-powered cars.

Tesla’s stock was down 10.54% to $629.36 Monday. To be sure, the overall stock market’s plummet hasn’t spared conventional car companies either. General Motors’  (GM) - Get Report was down 10.46% Monday to $25.69.

Many investors and analysts have argued for several years that Tesla was overvalued as it burns through cash and has suffered some production problems. Tesla’s short ratio, or the number of shares held short divided by average daily trading volume, totaled a whopping 0.76 as of Feb. 14, according to Yahoo Finance.

Morningstar analyst David Whiston gave Tesla a mixed review in a report he wrote two weeks ago.

“Tesla has a chance to be the dominant electric vehicle firm and is a leading autonomous vehicle player as well as a vertically integrated sustainable energy company with energy generation and storage products,” he said.

“But we do not see it having mass-market volume for about another decade.” That scenario wouldn’t seem to bode well for a stock amid a plunge in the overall market. At last check, the S&P 500 index traded at 2,819.00, down 4.89% Monday.

In his report two weeks ago, Whiston put fair value for Tesla shares at $471, down 22% from their current level.