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Tesla Motors Inc (TSLA) Stock Drops 10% and it’s a Good Thing

Tesla Model 3 (TSLA)

Tesla Motors Inc (NASDAQ:TSLA) made its IPO way back in 2010. Since then, its shares have never been down at the end of the year. But, for the first time this trend may end this year, tweeted WSJ’s Steven Russolillo on Thursday. The observation is accurate, but should be taken with a large grain of salt, says BI. Back in 2013, the stock finished the year up over 300%.

On December 29, 2016 Russolillo tweeted, “Tesla shares are down 10% this year, making 2016 the first time that $TSLA has dropped in a calendar year since its 2010 IPO.”

Stock down – probably good for Tesla

In 2016, Tesla Motors Inc (NASDAQ:TSLA) is indeed down just over 10%. The shares are, however, trading above $200 – “an important level if Tesla is to vindicate its $30-billion-plus market cap and, more importantly, establish a baseline that will make achieving Wall Street’s more bullish prediction possible,” notes BI.

In a way, it could be a positive thing that its shares are sliding, says BI. The EV firm was primed for a fall at the beginning of the year as its starting price was $240 – at one point it plunged to almost $140. Now, shares could be more correctly priced as the year 2017 begins. Investors who bought shares at the start of 2016 may not be comfortable with this, but the ones who bought at the bottom will be quite happy.

Tesla investors will have an interesting year in the form of 2017. Whether the stock will repeat its historic volatility or whether it will settle into a more stable pattern is still unclear. Properly valuing Tesla could be very tricky as well in 2017 as the company is merging its car business with the solar business through SolarCity’s acquisition.

A smart move

Much of Tesla’s next year trend could get clear next week, when Las Vegas will host CES 2017, where big names in consumer electronics and auto will show up. And, to keep ahead of the competition, Tesla has planned an event, which it will hold just a few hundred miles away from the CES.

Tesla Motors Inc (NASDAQ:TSLA)
Tesla Model X

On January 4, Tesla Motors Inc (NASDAQ:TSLA) plans to hold an invite-only ‘investor ‘event’ at its Gigafactory battery plant in Sparks, Nevada. CEO Elon Musk and CTO JB Straubel will also be present there.

As per Bloomberg, Dougherty & Co. analyst Charlie Anderson said, “Everyone is converging in Nevada for CES, which starts the next day. There have been tons of requests for Gigafactory tours.” Anderson also plans to attend the investor event.

With this strategic move, Tesla probably hopes to get in the good graces of analysts and investors, considering it plans to spend heavily and reach a production level of 500,000 vehicles annually by 2018.

On Thursday, Tesla shares closed down 2.30% at $214.68.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.

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