Is This an Entry Point for Shares of Tesla Motors Inc (TSLA)?

From their peak point of $259 per share at which shares of Tesla Motors Inc (NASDAQ:TSLA) were poised at on 14th November, 2014, it has been a downhill journey all the way till the value was placed at $214 per share on Monday, 8th December, 2014. CNBC reported that much of the decline has occurred over the last seven trading days wherein the tumble in the share value was estimated to be 14%.

While the exact reason for the downfall still remains obscure, experts have attributed it to the decline in gasoline prices in USA over the last two months. With gas costing $2.67 per gallon, the expenditure incurred by vehicle owners has decreased considerably and this has dampened their enthusiasm for electric cars manufactured by Tesla Motors Inc (NASDAQ:TSLA). As a Hong-Kong based analyst, Ole Hui puts it –

“With the low oil prices, people will think ‘I can buy a normal car, it’s more beneficial that way’. There’s less incentive to go to electric vehicles.”

Tesla Motor (TSLA)

If the low-price run of gasoline continues for a longer duration, it could have an adverse bearing on the demand for Tesla Motors Inc (NASDAQ:TSLA)’s vehicles, thus causing a dent in its projected sales and eventually profits. That said, sales accomplished over the month of November, 2014, reflect on a grim situation and cast doubt over the company’s ability to meet its sales target for the year which is coming to an end.

For a stock which has risen by over 1000% since its IPO in 2010, the last seven days of trade have been the worst in its history and this could translate into good news for investors who have faith in the fundamentals of the company. Since the shares are currently positioned well below the high point and the management is still very confident of meeting its long-term goals, serious consideration should be given to making an entry.

Tesla Motors Inc (NASDAQ:TSLA) intends to its sports utility version, Model X, in 2015 and it remains to be seen whether such an opportunity to buy shares would ever arise.

This article has been written by Vinita Basu.

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