Price concerns cause a 9.1% dip in Tesla Motors Inc. (NASDAQ:TSLA) share value

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By Thomas Copeland on September 17, 2014 Financial

On Monday,Tesla Motors Inc. (NASDAQ:TSLA) shares saw a decline of 9.1% following apprehensions from an analyst from Morgan Stanley (NYSE:MS) about the sharp increase in the price of the stock. Though the analyst opines that in the long term the value of Tesla shares is more than its present worth, he is apprehensive that the cause for the share price’s sharp increase may be inappropriate.

The Morgan Stanley (NYSE:MS) analyst pointed out four elements associated with Tesla that investors ought to consider. The first element would be that electric cars have been rather unsuccessful overall; they have not been accepted in the market as they should have been; moreover a few very unfortunate fire incidents in the past have also created doubts in buyers. Also, in China, Tesla Motors Inc. (NASDAQ:TSLA)’s sales revenue is subject to the expansion of its sales and service set up. Even if it sees success in China, there is a chance that Tesla Motors Inc. (NASDAQ:TSLA) may not have the capability to produce the required number of Model X and Model S cars for a number of quarters or perhaps, for many years.

Additionally, the analyst is of the opinion that Tesla Motors Inc. (NASDAQ:TSLA) is not a bulk maker at the moment and thinks that Tesla’s manufacturing ability is being miscalculated and over emphasized by investors. Consequently, he thinks that cars would be completely automatic and crowd sourced kinesis and mega fleets would prevail. People may actually stop purchasing cars at that time. In reality, in lieu of the present situation, it is hard to forecast the company’s upcoming market position. There are too many possibilities that can go either in favour or against the auto maker; therefore nothing concrete can be said at the moment.

In spite of these apprehensions, the analyst deliberated that Tesla Motors Inc. (NASDAQ:TSLA) has an overweight rating and believes it is the world’s most significant automobile manufacturer – a fact that simply cannot be ignored by both the market and the investors. Consequently, he believes there will not be a stable upward development in stock prices moving forward.

Elon Musk, Tesla Motors Inc. (NASDAQ:TSLA) CEO, recently stated that Tesla share prices are very high and this reflects in the analysts trepidations associated with the sharp increase in Tesla’s price. Before the CEO’s proclamation brought the share prices down, stocks had repeatedly reached unprecedented highs in the recent weeks.

Presently, Tesla Motors Inc. (NASDAQ:TSLA) exhibits a Zacks Rank #1, which is it rated as a Strong Buy. Some of the other significant auto stocks in similar sectors include Fox Factory Holding Corp (NASDAQ:FOXF) and O’Reilly Automotive Inc. (NASDAQ:ORLY) both of which hold a Zacks Rank #2, which means they are rated a Buy.

Tesla Motors Inc. (NASDAQ:TSLA)’s stock’s range over 52 weeks has been between the values of 116.10 and 291.42. The company’s shares have an inst. Ownership of 55% whereas the stock’s market cap is 35.64B. Currently it’s one year target estimate is 263.50