Why Tesla stock is down sharply today

The electric car maker's shares have fallen 15% month to date.

| More on:
Tesla stock represented by inside of the Tesla factory at work

Image source: The Motley Fool

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) tumbled on Thursday, declining more than 4% as of 12:40 p.m. ET. The stock is likely down because of knee-jerk selling in many growth stocks on Thursday, following the Federal Reserve's commentary yesterday about its expectations to raise interest rates next year. The growth stock's decline extends a bearish trend for the electric car maker's shares recently. Share have fallen a total of 15% in December alone.

So what

Many growth stocks were trading lower on Thursday. This is partly evidenced by the tech-heavy Nasdaq Composite's near-2% decline as of this writing. The index has more growth stocks in it than the S&P 500, which was down a lesser 0.5% as of this writing. While Tesla stock has been battered and bruised in recent trading days, the stock is still up a market-beating 32% year to date. And that's on top of a nearly 700% gain in 2020. Shares, therefore, may simply be taking a breather after an epic run-up over the last two years.

Now what

Looking ahead, investors will be looking for Tesla to report strong vehicle deliveries for its fourth quarter. The company typically reports fourth-quarter deliveries within the first three calendar days of each year. So, investors can expect an update on Tesla's quarterly deliveries by Jan. 3, 2022. Analysts are largely expecting record deliveries for the period. Tesla will need to continue growing its vehicle deliveries rapidly in order to justify its high valuation. As of this writing, the stock trades at about 300 times earnings. Though earnings have notably been growing very rapidly. 

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 and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

AI written in blue on a digital chip.
International Stock News

Here's why Nvidia outperforms out to 2028

Nvidia's multilayered moat makes its dominance effectively unbreakable through 2028.

Read more »

Electric vehicle such as Tesla being charged at charging station.
International Stock News

3 serious Tesla problems investors aren't talking enough baout

While there are plenty of negative developments to choose from, Tesla investors need to remember these three.

Read more »

Semiconductor chip on top of piles of mini US and China flags.
International Stock News

Prediction: Nvidia's new China deal will be a game-changer. Here's why

Nvidia has agreed to pay 15% of its China sales to the U.S. government.

Read more »

A laughing woman wearing a bright yellow suit, black glasses, and a black hat spins dollar bills out of her hands.
International Stock News

Prediction: This unstoppable stock will be a founding member of the $6 trillion club by 2027

Take an industry leader, add in a healthy dose of secular tailwinds and a large addressable market, and you get…

Read more »

A woman sits in a cafe wearing a polka dotted shirt and holding a latte in one hand while reading something on a laptop that is sitting on the table in front of her
International Stock News

1 Monster stock to hold for the next 5 years

This leading tech company has rewarded its shareholders in the past.

Read more »

Hand with AI in capital letters and AI-related digital icons.
International Stock News

Prediction: 2 artificial intelligence (AI) stocks that will be worth more than Nvidia by 2030

The market expects a lot from Nvidia, but it might not fully appreciate the potential of these two AI giants.

Read more »

Man charging an electric vehicle.
International Stock News

Thinking of buying Tesla stock? Here are 2 red flags to watch

Tesla's stock is not for the faint-hearted.

Read more »

Woman looks amazed and shocked as she looks at her laptop.
International Stock News

If You'd Invested $1,000 in Nvidia Stock 5 Years Ago, Here's How Much You'd Have Today

Investors would have seen their investments grow tremendously over the past half-decade.

Read more »