A run of bad news has lowered the market cap of Tesla Inc. (NASDAQ: TSLA) by 19% since the shares of the electric car maker reached their closing high price for the year on June 23.
On that date, Tesla’s shares closed at $383.45, and its market cap of $62.98 billion exceeded those of combustion-engine rivals Ford and General Motors.
Palo Alto, California-based Tesla was riding high in early June following the news that its 2017 Tesla Model X had been awarded a five-star crash safety ratings in every category from the National Highway Traffic Safety Administration, the first sport utility vehicle to achieve this.
But Tesla’s fortunes have taken a wrong turn since that time. So far this week, the company’s shares are down more than 16% and closed Thursday at $308.83 in trading in New York. Tesla’s market cap was $50.73 billion on Thursday. The shares were regaining some of the losses in premarket trading Friday and were up 1.8%.
This week, Tesla’s Model S missed the top safety rating from the Insurance Institute for Highway Safety (IIHS) in a crucial crash test for one of its models.
The Tesla Model S had earned an “acceptable” rating in the small overlap front test in an earlier appraisal of the vehicle by IIHS, a nonprofit organization funded by auto insurers. It was the only one of five categories in which Tesla failed to receive a “good’’ rating from IIHS. The overlap test simulates the type of crash that occurs when the front driver-side corner of a vehicle hits a tree or utility pole or collides with another vehicle.
Tesla tried to minimize the results. In a statement to CNBC, a Tesla representative alluded to possible subjective motivations by IIHS, while touting the ratings the Model S and Model X received from the National Highway Traffic Safety Administration.
Other doubts about Tesla have emerged in the investment community. Production of its cars was short of the analyst consensus in its most recently released quarter. Goldman Sachs questioned the strength of Tesla’s business model and warned the stock could plunge.