Tesla shares are soaring on German approval

The stock rose 14% after regulators found no defects in fire incidents involving the Model S.

By MSN Money Partner Dec 3, 2013 3:02PM
Tesla Model S sedans outside of the Tesla Factory on August 16, 2013 in Fremont, Calif. (© Justin Sullivan/Getty Images)By Mamta Badkar, Business Insider

Shares of Tesla Motors (TSLA) were up more than 14% Tuesday in midday trading to $141.96. 

The stock is being buoyed on news that the German Federal Motor Transport Authority cleared the Model S.

The German regulator had reviewed the Model S fire incidents in Seattle, Tennessee, and Mexico. It said: "According to the documents, no manufacturer-related defects. . . could be found. Therefore, no further measures under the German Product Safety Act."


The stock also got a nice boost after Morgan Stanley called Tesla its top pick among 26 automakers in its U.S. coverage. Jonas also said the stock is now nearly 20% undervalued.


"Tesla shares have moved from 20% overvalued to nearly 20% undervalued in just 2 months. We attribute the majority of the 35% retrenchment in the share price to a momentum/cult stock that produced 3Q results not strong enough to move expectations significantly higher. 


"For a 5-bagger, that’s a problem. With little or no valuation support on near-term expectations, the stock was due for a big correction. We attribute less than half of the price move to negative headlines on the 3 Model S fires since October 1st."


While Jonas isn't calling a bottom, he thinks this a good time for buyers to step in.


The stock had taken a beating earlier this year after a series of fires caused by accidents, which prompted Elon Musk to take to the Tesla Motors Blog to defend the Model S. The stock also took a hit after it missed analyst estimates on vehicle deliveries in its Q3 earnings report.


Tesla shares hit an all-time closing high of $193.37 on Sept. 30. The stock is down 28% from its closing high, but is up over 305% year-to-date.


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Tags: TSLA
6Comments
Dec 3, 2013 5:04PM
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Who wants a Tesla when the same money will buy a Mercedes Benz C63 AMG? 

And a $70,000 electric car? What to save gas? You gotta be kidding!

Yuk yuk!
Dec 3, 2013 5:07PM
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 It's the best darn car charged with electricity generated by carbon fuel? Ahhh never mind dont hurt your liberal lil head you stupid drooling democrats.
Dec 3, 2013 5:31PM
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Tesla Blahahahahahahah. The car for tree hugging morons.
Dec 3, 2013 5:29PM
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Who wants a Mercedes when I can buy a thousand bikes and pedal my asss off for nuttin!!!!!!!
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