The Californian electric company took its biggest one-month hit in October after growing investor concern that a fivefold stock-price jump was more than its growth prospects.
Tesla slumped 17 % in October, its first monthly fall since February and biggest since December 2010. The Palo Alto, California-based carmaker reached a market worth of $19.4 billion, down from its peak of $23.5 billion on Sept. 30. The $4.1 billion loss in value is even bigger than the $4 billion market valuation at the start of 2013.
“The stock is priced to perfection right now,” said Ben Kallo, an equity analyst for Robert W. Baird & Co. in San Francisco.
“There’s perhaps a growing view that significant cash earn in 2013 is likely to turn to significant cash burn in 2014,” said James Albertine, an analyst with Stifel Equity Research in Baltimore.
Investors have given so far to the company a valuation of 262 times estimated earnings, But Tesla faces a number of challenges: increasing production, successfully selling the Model S sedan in Europe and Asia, broadening a small network of company-run stores and introducing an electric sport-utility vehicle. It also needs to avoid defects and delays that anger customers and could harm its reputation.
Tesla cars had two incidents that ended in fires — first in Washington on Oct. 1 and then in Mexico on Oct. 18. While neither were investigated by U.S. safety officials, they happened as some investors were already questioning if the stock had gone too far too fast.