Tesla car fire shows how irrational the stock market can be
The day before yesterday, a Tesla Model S was filmed catching fire:
Tesla investigated and in an E-mail on Wednesday, a spokeswoman, Elizabeth Jarvis-Shean, said the fire was caused by the
“direct impact of a large metallic object to one of the 16 modules within the Model S battery pack.”
On this news the stock price took a 6% hit, the biggest decline since july, followed by 3% today (markets just opened).
Interestingly, car fires happen on a daily basis. In 2007, vehicle fires cost Americans $1.41 billion dollars.
The Tesla Car has been rated the safest car on the road and has been hailed as one of the best cars of all time by car reviewers and customers alike. So, why has a single car fire – caused by an accident that could have had the same effect on gasoline powered cars – so much impact?
I think, Investors need to remove the emotions from Tesla and realize that it’s just another stock, one that will likely deliver decent, maybe spectacular, earnings from here on out.
What do you think are “emotional” stocks that also suffer disproportionally from “irrational” decision making? Let me know in the comments! (for your convenience now featuring Disqus integration …)