It baffles me how somebody willing to buy TSLA would become scared so easily. I don't pretend to understand markets so could anyone explain how such behavior is possible?
No one owns Tesla stock for market value reasons. It's overpriced, but that doesn't mean you can't make money on the stock in the short term.
I own it because I honestly don't know where else to put the money I allocate towards tech stock purchases. AAPL has no room for further growth until we colonize the outer planets, and other recent success stories like YHOO seem even less sustainable.
Picking stocks of reasonably promising companies with incompetent competitors seems like a good strategy, hence TSLA.
Or you buy because there is a crazy amount of hype on the stock and a history of insane growth. Your expectation is more of the same. That suddenly changes dramatically. You sell.
The stock has been traded mostly on pure momentum and speculation of late. That kind of scenario is highly sensitive to any kind of news.
I'm surprised the tumble wasn't worse than it was. There must be some real solid long term money in play.
There was something earlier this year where a news agency's twitter account was hacked, and the hacker reported that there was an attack on the white house, and the stock markets went crazy for a bit.
http://www.usatoday.com/story/money/markets/2013/04/23/stock...
Edit: Also, the stock was downgraded.
This isn't retail traders. It's institutional traders who understand that the value proposition of Tesla relies upon getting over the hump of "the new", which is a perilous position where any risks that differ from the old risks have a very negative impact on the proposition.
We know and accept that normal cars can catch on fire, and that gas tanks can be punctured and leak, etc. These are known quantities. Crazy exploding/catch on fire batteries though seems new and scary. It may be entirely irrational, but institutional investors understand the importance of psychology (this no-one-injured car fire is in being carried by the majority of news sources) so they just move the money to other investments.