x Abu Dhabi, UAEFriday 28 July 2017

Tesla gets a shock as share price takes dive

Investment analyst puts 'sell' rating on maker of electric cars.

Shares of Tesla Motors, the electric-car maker partly owned by Abu Dhabi investors, were under pressure this week as an analyst forecast that hybrids would become more popular than purely electric vehicles.

Tesla shares dropped 15 per cent on Monday after Capstone Investments initiated coverage of the US company with a "sell" rating.

The shares are down more than 20 per cent in the past week, but remained unchanged in New York trading yesterday.

The decline in the share price comes in the same week that the lock-up period for early investors expired, meaning those who owned shares at the time of the company's public offering in July can now sell them.

Carter Driscoll, the Capstone analyst who issued the negative rating, said he believed consumers would prefer cheaper plug-in cars and other hybrids over Tesla's offerings.

Tesla's first car, a high-speed, two-seat roadster, costs more than US$100,000 [Dh367,000] and was touted by celebrities including the Hollywood star George Clooney.

The company is developing a more economical saloon it hopes will appeal to a broader market.

"They need to execute almost flawlessly versus their valuation for the stock price to be justified," Mr Driscoll said.

Aabar Investments, which is majority-owned by the Abu Dhabi Government, holds a 3.63 per cent stake in Tesla.

The Abu Dhabi Water and Electricity Authority is also a shareholder.

The company has a number of other high-profile investors including Elon Musk, a co-founder of PayPal. Mr Musk also founded Tesla and is its largest shareholder.

Panasonic, the largest maker of rechargeable batteries, last month bought a $30 million stake in the firm, while the US government in March loaned the company $465m to support development of its saloon.

Those loans are due in 2012, the same year the new car is due to go on sale to the public.

Tesla stocks are being targeted at the moment by a number of short sellers, with more than 7 million shares listed as sold short out of a total float of slightly more than 10 million.

 

breagan@thenational.ae