Shares of electric car manufacturer Tesla (NASDAQ:TSLA) jumped 3.6% when CEO Elon Musk issued a tweet that Tesla will end ‘range anxiety.’ So far, this recent jump in Tesla stock marks the tenth time in 2015 the companies stock moved more than 3%. That’s how much hype and market attention is heaped on this car manufacturer.
What does Musk’s tweet mean? Well, one of the main drags on the wider adoption of electric vehicle, whether sportscars or not, is the limited charging range of such vehicles. This is a perfectly understandable concern since there aren’t exactly a surplus of charging stations scattered evenly throughout the United States and elsewhere. The longer an electric car can run on one charge, the more convenient it is to drive.
Monday’s price spike is the highest for Tesla since Feb 19 when the company’s stock appreciated 3.9%. Still, it appears the market is beginning to cool to Tesla. Over a 12-month period, the stock is down 15%.
Despite all the sex appeal of the high technology that surrounds it, it is essentially a car company and its P/E ratio is ridiculously high for a car company. Considering the fact that it isn’t making as much money as traditional car companies, it has been harder and harder to justify the company’s current valuation. Still, Tesla is so closely related to Silicon Valley that a lot of the same market irrationality and super-stretched P/E ratios that you’d normally see apply to social networking stocks or software companies apply to this car company.
