Why Tesla stock just keeps falling

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Between a price target hike from Bank of America and some very positive news on electric car battery ranges, Thursday should have been a great day to own Tesla (NASDAQ: TSLA) stock — but it’s not working out that way.

Instead of going up, Tesla stock is going down today, falling 4% as of 10:30 a.m. ET and extending a three-day slide that has already cost Tesla investors 12.5% since the start of the New Year.

So what

But let’s begin with the good news. This morning, analysts at Bank of America raised their price target on Tesla stock to $1,300 a share, as StreetInsider.com reports. On the one hand, the news isn’t as good as it could have been, because BofA stuck with its neutral stock rating on Tesla. On the other hand, though, if the banker is right about its price target, Tesla stock could do a whole lot better than “neutral” this year. It could actually gain as much as 24%.

More unambiguously good news today comes out of Michigan, where battery start-up Our Next Energy, which goes by the nickname ONE, says it has just conducted a road test of a Tesla Model S sedan retrofitted with a prototype ONE battery — and gotten the car to go 752 miles on a single charge. Even more incredible, ONE’s tweaked Tesla accomplished this feat in the ice-cold month of December, when rechargeable battery performance is usually at its weakest. (A third-party tester validating ONE’s result “using a vehicle dynamometer,” presumably not at outdoor temperatures, was able to achieve an even more incredible 882-mile range for the car).  

Now what

Now, that all sounds like fantastic news for Tesla. From an investing angle, one investment bank thinks its stock is worth a lot more than it costs today. From a business angle, another company has independently come up with a battery that — if produced at commercial volumes — could dramatically increase the range of Tesla’s cars.

Granted, that might come at the cost of some profit margin for Tesla, if it needs to license ONE’s technology to achieve the range improvement, rather than building its own batteries in-house and with partners. But if the upside is eliminating car buyers’ “range anxiety” about electric cars once and for all, I suspect it would be worth sacrificing a point or two of profit margin to do that.

Sadly, Tesla stock isn’t reaping any gains from today’s positive developments. Instead, its stock is continuing to crumble along with the rest of the growth stocks on fears the Federal Reserve’s planned interest rate hikes will kill the bull market in stocks.

It just goes to show: Sometimes, you can’t fight the Fed — going up or going down. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock just keeps falling appeared first on The Motley Fool Australia.

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Rich Smith has no position in any of the stocks mentioned. Bank of America is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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