Shares of Tesla Motors Inc. sank Thursday as the fervor surrounding the electric car maker's blowout public offering washed away.
The stock slid $1.87, or 7.9 percent, to settle at $21.96 on its third day of trading, but was still 29 percent above the $17 IPO price. Investors ran shares up to trade as high as $30.42 Wednesday, betting on Tesla's future as a player in the electric car market.
But that excitement waned as investors began to consider the Palo Alto, Calif.-based company's current performance. Tesla has not had a profitable quarter since it was founded in 2003 and has sold only about 1,000 of its high-end electric cars to date.
"There has just been so much buzz and people have been motivated to buy the stock based on the notion of a sexy, green-tech company and not on an understanding of its business plan," said Francis Gaskins of IPOdesktop. "Tesla brought in people who wouldn't normally invest, a lot of inexperienced IPO buyers."
The company currently sells just one vehicle, the $109,000 Roadster sports car. Tesla said Thursday that it will start selling a new version of the car, the Roadster 2.5, in Denmark and California.
Tesla plans to start selling a four-door luxury sedan, the Model S, by 2012.
The initial offering raised $226.1 million after selling 13.3 million shares priced at $17 apiece. Tesla had earlier expected to price just 11.1 million shares at $14 to $16 per share.
The IPO has had an impressive run this week given the volatile stock market and the lackluster performance of some recent initial public offerings this year. Now investors are looking to cash in and take profits, said IPO market tracker Scott Sweet of IPOBoutique.
"Certainly people who initially got in on the IPO because of wishful thinking and its cult-like status are now hesitant to hold an extremely speculative stock over the long weekend," Sweet said.
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