Why Tesla (TSLA) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of Tesla Motors (TSLA) are down -0.89% to $283.50 in pre-market trade after CEO Elon Musk, while announcing Nevada as the winner of the electric automobile company's $5 billion battery gigafactory, said investors often "get carried away" with the electric car company's stock price, CNBC reports.

"I think our stock price is kind of high right now," Musk, responding to a question from CNBC at the news conference in Carson City. "If you care about the long term, Tesla, I think the stock is a good price. If you look at the short term, it is less clear."

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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TSLA's very impressive revenue growth greatly exceeded the industry average of 11.5%. Since the same quarter one year prior, revenues leaped by 89.9%. 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.
  • Compared to its closing price of one year ago, TSLA's share price has jumped by 58.52%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 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. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TESLA MOTORS INC continued to lose money by earning -$0.71 versus -$3.70 in the prior year. This year, the market expects an improvement in earnings ($1.14 versus -$0.71).
  • The gross profit margin for TESLA MOTORS INC is currently lower than what is desirable, coming in at 34.80%. Regardless of TSLA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, TSLA's net profit margin of -8.04% significantly underperformed when compared to the industry average.
  • 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 102.9% when compared to the same quarter one year ago, falling from -$30.50 million to -$61.90 million.
  • You can view the full analysis from the report here: TSLA Ratings Report
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