NEW YORK (TheStreet) -- Tesla Motors (TSLA) shares are climbing, up 1.35% to $265.55 in early market trading on Monday, after CEO Elon Musk announced that the electric vehicle maker would be extending the warranty on its Model S sedan to eight years and unlimited miles.
The announcement may be a response to consumer magazines Edmunds and Consumer Reports' negative review of the long-term durability of the company's most popular sedan.
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However, both magazines reported that the flaws they experienced after a year of heavy driving were repaired under the company's old four year, 50,000 mile warranty at no additional cost.
Musk admitted that the extended warranty, which applies retroactively to all Model S previously sold, would have a "moderately negative effect" on the company's earnings in the short term in a statement released on Tesla's website Friday.
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 robust revenue growth, solid stock price performance and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins."