One of this week’s biggest news items pertains to previously high-flying Tesla (NasdaqGM: TSLA), Elon Musk’s electric car company.
The long and short of it, no pun intended, is that shares of Tesla, one of this year’s top-performing stocks, have plunged 10.2% since Tuesday after a video went viral showing the company’s Model S. Predictably, that raised questions about the car’s safety. Questions about a vehicle’s safety rarely lead to near-term upside for the automaker in question and Tesla has proved that point.
The fire is a “stunning reality check for a company that has garnered almost unanimous praise for its battery-powered vehicles,” reports Bill Vlasic for the New York Times.
Further fallout from the fire could not only test investors’ appetite for shares of Elon Musk’s company, over 26% of which are sold short, but appetite for some ETFs that have surged thanks to large allocations to the stock.
The Market Vectors Global Alternative Energy ETF (NYSEArca: GEX) and the First Trust NASDAQ Clean Edge Green Energy Index Fund (NasdaqGS: QCLN) are up 64.6% and 69.3%, respectively, year-to-date, ranking both among this year’s top-performing sector ETFs. Tesla is a big reason why. [Alternative Energy ETFs Could Rally Into Year-End]