Why Tesla Stock Fell Monday

Some investors are taking profits on the electric-car maker's stock after an astronomical run-up.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Tesla (NASDAQ: TSLA) are taking a hit on Monday. Shares fell as much as 8.7% and are down 7.8% as of 12:15 EST.

The stock's decline comes as the broader market sells off on Monday due to fears about the spread of the coronavirus to South Korea and Italy. At the time of this writing, the S&P 500 is down 3% and the Nasdaq Composite is down 3.6%.

So what

Of course, Tesla stock's 7.8% decline is worse than the market's sell-off on Monday. However, this outsize decline isn't surprising. Even including the stock's pullback today, shares are still up nearly 300% in the past six months alone. This market pullback may have sparked a large number of investors deciding to pocket some gains after such an enormous run-up.

Further, some investors may be worried about the impact of the virus' outbreak on Tesla's factory in China. The electric-car maker recently reopened its factory in Shanghai after an extended shutdown due to coronavirus concerns. But there's always a chance the factory could be shut down once again.

Now what

Tesla was counting on its recently launched factory in Shanghai to provide a boost to sales in 2020 by building more Model 3 vehicles for the China market. However, Tesla said in its fourth-quarter earnings call that it had sufficient cash to continue its expansion plans even in the face of headwinds in the country -- and this was notably said before the company raised $2.31 billion more dollars in a well-timed stock offering.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
International Stock News

If you invested $10,000 in Nvidia stock the day ChatGPT came out, this is how much you'd have today

Buying Nvidia when the disruptive AI chatbot launched would have been a smart move.

Read more »

A Tesla car driving along a road at sunset
International Stock News

Why Tesla stock was climbing today

Investors were encouraged by news of a price hike on the Model Y.

Read more »

Plate with coloured wedges being parcelled out like a slice of pie representing a share split
International Stock News

Stock-split watch: Is Nvidia next?

Nvidia last split its stock when it traded for a pre-split $744 in 2021.

Read more »

A woman in jeans and a casual jumper leans on her car and looks seriously at her mobile phone while her vehicle is charged at an electic vehicle recharging station.
International Stock News

1 Wall Street analyst thinks Tesla stock is going to $125. Is it a sell?

Tesla is no longer a magnificent stock, according to a Wells Fargo analyst.

Read more »

A young man goes over his finances and investment portfolio at home.
International Stock News

Is Nvidia stock a buy?

The company's stock could rise 40% over the next two years and outperform the S&P 500.

Read more »

Man with hands in the middle of two items with money bags on them.
International Stock News

Is Nvidia headed for a stock split?

Nvidia stock has split five previous times in the company's history.

Read more »

Digital rocket on a laptop.
International Stock News

Nvidia shares surged (again) today. Is it too late to buy the red-hot artificial intelligence (AI) growth stock?

Nvidia stock has gained nearly 300% over the past year. Can investors still profit from this AI stock?

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Can you buy Nvidia shares on the ASX?

This stock has rocketed higher. How do we get access to it?

Read more »