In the absence of any new reports of car fires, Tesla Motors, the fastest-growing automotive stock this year, rose again as the Model S sedan maker moves ahead with plans to expand its business.
Tesla, led by billionaire entrepreneur Elon Musk, plunged in November after reports of battery-related fires in its Model S vehicle that month and in October. A third incident last month led the National Highway Traffic Safety Administration to open an inquiry. Now, the impact of those reports has eased and Tesla was helped by a report that the German authority (where it started selling the Model S recently) decided not to pursue an investigation on the fires.
“Tesla is recovering from a negative news cycle, and also the prospect of sales in China is lifting the stock,” said Andrea James, an equity analyst for Dougherty & Co.
The shares gained 3.1 % to $152.46 at the close in New York, the highest price since Nov. 5. Tesla has rebounded by more than 26 % since closing at $120.50 on Nov. 26. James recommends buying the Palo Alto, California-based company’s shares, while Brian Johnson, a Barclays Plc analyst, has the equivalent of a hold rating on the stock.
Tesla’s plans for a lower-priced electric car due in 2016 are on track, with a version to be shown as early as January 2015, the Los Angeles Times reported. The automaker was also added to press conference schedule for the North American International Auto Show in Detroit next month.