Sometimes truth produces stories that fiction could not even hope to touch. One of those hit today as word emerged about how electric vehicle giant Tesla (TSLA) had a hand—albeit an indirect one—in the downfall of Mistergreen, a Dutch leasing and rental firm. This story has some exciting twists and turns to it, but it meant little to investors, who sent Tesla shares down fractionally in Tuesday afternoon’s trading.
Claim 70% Off TipRanks This Holiday Season
- Unlock hedge-fund level data and powerful investing tools for smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential
Mistergreen believed in the notion of electric cars very firmly, and believed that Teslas were about to be a major part of the road in general. Thus, it built a fleet of over 4,000 Teslas, banking on the growth of full self-driving to ultimately turn these 4,000 cars into not only appreciating assets, but also, revenue generators.
Sadly, that proved not to be the case. Full self-driving made some strides, but not as many as most would have liked by now. And with Teslas doing a fairly poor job of holding value, Mistergreen is now left tumbling toward bankruptcy, selling off what Teslas it has left to other leasing firms. Given that CEO Elon Musk made statements suggesting that most Teslas would be able to operate as robotaxis—not just the handful of same we see in service now—Mistergreen just ran with the idea, into a brick wall.
But Elon Insisted
Speaking of Musk, another major problem at Tesla seems to be connected directly to him: the electric door system on the cars. Reports note that the electric door system design traces back to 2016, when Musk directly challenged Tesla to pull traditional handles off the doors and used powered internal workings instead.
Reports noted that engineers challenged Musk on the notion, citing safety concerns, and saying that mechanical handles would still be necessary. Musk pushed back, and being the CEO, won. With 15 deaths noted as connected to the electric door system’s failure, the decision takes on a whole new kind of gravity.
Is Tesla a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 11 Buys, 12 Holds, and nine Sells assigned in the past three months, as indicated by the graphic below. After a 5.72% rally in its share price over the past year, the average TSLA price target of $382.87 per share implies 20.98% downside risk.
