• Jul 7, 2010
After rising 41 percent on the first day of trading, stock in Tesla Motors has been in an alarming freefall. Yesterday, shares of Tesla Motors fell another 16 percent, landing below their initial offering price of $17 each. For those keeping track of such things, company head and largest shareholder Elon Musk's shares are now worth $433 million, a good bit less than their $457 million value after the IPO.

We're clearly not experts on the subject, so we'll tell you what more qualified people have to say. According to Josef Schuster, the Chicago-based founder of IPOX Capital Management LLC, "The company is a great concept with relatively weak fundamentals. Markets are weak and in a weak market right now this is hurting the company even more."

Financial expert Michael Holland explains, "They brought this thing into a market that was not rewarding hype... The stock did get its pop, and now it's plagued by the reality of the marketplace. The reality of the marketplace is that people aren't paying for dreams and visions."

[Source: Business Week, MarketWatch]


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  • 30 Comments
      • 4 Years Ago
      Burn baby burn! I really hope Tesla just goes away.

      This will be an interesting stock to watch now. I finally have a reason to visit the NYSE's webpage again.



      -Josh
      • 4 Years Ago
      I guess I'll spend my monopoly money on the other vapor car company: Fisker.

      Although, I am hoping Fisker Automotive is the real deal. We shall see I guess...
      • 4 Years Ago
      This used to be very common in the IPO market, where hedge-funds and large investors would get in on a hot IPO, ride the spike for the first day or two, and then punch out having made 10-15% (or more) of risk-free money in a couple of days. If you're looking to buy an IPO and you don't have the pull to get in on the initial offering, DON'T just put in a market order for the day that it's offered. Wait a week and pick it up after it's gone up, and then come back down to reality.

      So I'd say this is nothing new, although nobody really knows in this market.
        • 4 Years Ago
        travisty- You're a 100% correct in your analysis. Unfortunately for Musk and any other Tesla employee that got stock from the IPO, they're stuck with it for the 180 day lock-up period. By then it could be 50 cents or $50.
      • 4 Years Ago
      US Citizens (via our Government) loaned Tesla $465 million last June. Wonder if we're taking our interest in preferred stock?
      • 4 Years Ago
      What do you expect doing your IPO as the economy sputters, and we enter another recession?
      • 4 Years Ago
      By the way, my animosity towards Tesla is their product offering of a $100k sports car based on a Lotus platform, and a premium sedan that the general public cannot afford.

      As much as I hate the Prius (more looks than anything), they've offered a product that people want and can afford, realistically.

      I don't see the point in flushing tax payer dollars down to a premium car maker when their technology is sub-par.

      -Josh
      • 4 Years Ago
      Hey guys, I am offering an IPO for a car I am going to build next year (or so). Here is a model of it
      http://www.wallpaperbase.com/wallpapers/cars/modelcars/model_cars_5.jpg

      Happy investing!!
      • 4 Years Ago
      You don't think the timing of the Tesla IPO had anything to do with the end of the second quarter do you? I mean Goldman must have had a reason for underwriting the stock offering.

      Oh and this wasn't just a little 15% bump in a stock price the stock went up over 70% in two days and then sold off like mad. I wonder if that had anything do do with large investment banks making a quick buck to prop up earnings.

      Low and behold State Street comes out and says that earnings will be better than analyst expectations and we get a stock market rally today. Oils has also climbed about $1.50 on the news. No no real factor can explain the increase other than an investment group saying they are going to earn more money than people thought. SO that means the economy is expanding at a rapid pace.

      The Tesla IPO was never meant make money for people in the long run. It was engineered from the get go to be a flash in the pan offering to generate quick profits for the nations largest investment banks. The stock market is a joke, a purely manipulated entity that exists for the sole purpose of separating the common man from his money.

      Musk understands this game well. Create a product that can't make money by itself but generate enough buzz that it gets bought out and get rich in the process. I fully expect Tesla to fall below $10 a share perhaps even as low as $5. Then you will get a major car company to come in and buy Tesla's assets. They do own a few patents other electric car producing corporations would like to have. Musk will make out with a few hundred million.
        • 4 Years Ago
        It was also designed to help other VCs get their money out through the bigger fool theory.
      • 4 Years Ago
      Sad.
      • 4 Years Ago
      I suspected Tesla's stock price would fall after all of the IPO hoopla had subsided and the dust settled. I further suspect the price will dip a bit lower before it finally stabilizes. My immediate guess would be somewhere between $10 to $15 a share.

      Last week the stock hit a high of more than $30 a share. For those folks that jumped in and caught the wave at that price, with the anticipation the price would go up, are now singing that classic tune, "Cry Me A River." Followed of course by a few bars of "Agony! Agony!"
      • 4 Years Ago
      I think last week's "Rant" at The Autoextremist was prescient:

      http://www.autoextremist.com/current/?currentPage=2

      Elon Musk is just another in a long line of people who thought they could do things better and smarter than those that have been doing it for decades.
      • 4 Years Ago
      " now worth $433 million, a good bit less than their $457 million value after the IPO"

      Check your math.
        • 4 Years Ago
        Right, it just has to do with the timing of the figures the article provides.

        You're awesome, thanks.
        • 4 Years Ago
        Yes, that is correct (thanks) but my point is, what is the percentage return on that original 457 mm ?
        • 4 Years Ago
        ahh i see what you're saying. Don't forget that the price from the IPO shot up, so the 433mil is only a little less than the IPO but a lot less than what it was at some point. travisty's comment down the page sums it up pretty good
        • 4 Years Ago
        457mil / $17.00 ipo = x(current value) / 16.11(current quote)

        17x = 457mil * 16.11

        17x = 7,362,270,000

        x = $433,074, 705

        considered it checked
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