Tesla Motors Inc. (Nasdaq: TSLA) stock was up slightly in early trading today (Wednesday), reaching $224.22 this morning. That was a gain of 2% from yesterday's close.
Today's initial spike was good news for TSLA stock, as it has posted a loss in the last six trading sessions. Tesla closed June 30 at $240.06, and dropped nearly 9% through yesterday's closing price. Overall, it's down 7% in July.
As a momentum stock, any hint of positive or negative news sends TSLA stock up or down accordingly. And that's exactly what has been happening in July as several negative news stories have been published.
First, it was announced that sales in Norway - one of Tesla's top European markets - had slowed considerably. According to analysts at OFV in Oslo, Tesla sold 536 electric vehicles (EVs) during the month of June, which was down from the high of 1,493 it had sold in March. May's numbers were even more lackluster, selling just 373 cars in Norway that month.
That news was enough to send shares down as much as 3% on July 2.
But the news wasn't as bad as it first appeared. While slowing European sales were concerning for investors, they were offset by increased sales from China.
"Chinese media reports indicate that Tesla imported 1,545 Model S units into China in 2Q, with 958 units in June," Barclays analyst Brian Johnson said in a research note. "Assuming some lag time between receipt of import and delivery, Tesla likely delivered [between] 1,000 [and] 1,300 units to the market in 2Q, slightly ahead of our 1,000 unit expectation for Tesla's debut in the Chinese market."
Even though sales in China appear to be on par with the consensus estimates, there was another issue in the Chinese market that helped send shares lower this week.
According to a report from MarketWatch this week, China has set plans to build 10,000 EV charging stations in Beijing. However, the bad news for Tesla is that the new chargers will not be compatible with its vehicles.
"Authorities in Beijing released a plan for promoting electric cars late last month, calling for the construction of 10,000 rapid-charging stations throughout the city by 2017," MarketWatch reported. "But ongoing efforts to revise China's standards for charging technology are plagued with technical disputes, and incompatibilities between those standards and the technology used by Tesla Motors Inc. mean that the charger network won't support the company's electric-car models."
That charger complication is an obstacle Tesla was hoping to avoid last month when Chief Executive Officer Elon Musk opened up all of the company's charging patents, urging other automakers to create one universally used charging system. The development of Tesla chargers in China will bear watching through the rest of 2014.
As Tesla continues to struggle with negative headlines throughout July, here's the best way to play Tesla stock now...
How to Play Tesla (Nasdaq: TSLA) Stock Now
Investors can expect Tesla to remain extremely volatile in the short term, and should anticipate that the stock will continue to move in conjunction with the headlines the company makes.
This year has seen plenty of ups and downs for TSLA. From January through the end of February, TSLA stock climbed 63%. From there, the stock dropped 27% through the first week of May. Since May 8, Tesla stock has rebounded 10%.
Because of that volatility, TSLA stock is not a short-term play right now.
However, for investors looking for aggressive long-term plays, TSLA is a good option. Tesla and Musk are pioneers in the EV market, and have shown a continued determination to changing the way the world views vehicles.
"Tesla Motors was created to accelerate the advent of sustainable transport," Musk wrote on the company's blog last month. "If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal."
That opening of patents last month showed Musk's commitment to the success of the electric vehicle market, which would help every EV manufacturer, not just Tesla.
Money Morning's Chief Investment Strategist Keith Fitz-Gerald also says the long-term potential for TSLA stock is undeniable.
"I think Elon Musk is one of the most dynamic CEOs on the planet, and I believe he has the potential to make Tesla a $1,000 stock within the decade," Fitz-Gerald said.
Editor's Note: Elon Musk has helped Tesla stock gain a whopping 128% in the past year as the company operates as a major tech game changer.
Now Tesla is engaged in a highly sensitive venture called BlueStar that could disrupt $737 billion of the U.S. economy and impact 98% of the population.
Few details concerning BlueStar have made their way into the press. However, a recent investigation uncovered some shocking revelations... take a look.
Do you invest in Tesla? Join the conversation on Twitter @moneymorning with #Tesla.
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