Please ensure Javascript is enabled for purposes of website accessibility

Why Tesla, Inc. Stock Fell Friday

By Daniel Sparks - Feb 9, 2018 at 4:12PM

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

Fortunately, most of its 6.5% decline on Friday was recovered.

What happened

Shares of electric-car company Tesla (TSLA 4.53%) took on a hit on Friday, falling as much as 6.5%. But the loss improved by the end of the day, with the stock finishing the trading day down 1.5%.

Though the stock's slide followed its decline on Thursday after Tesla reported its worst-ever quarterly loss, its sell-off on Friday seemed to be more closely tied to broader market trends.

A Tesla Model X with its falcon wing doors open in a garage

Model X. Image source: Tesla.

So what

Tesla joined the ranks of growth tech giants like Amazon and Netflix on Friday, which sold off Friday afternoon alongside the S&P 500, but to a much greater degree. While Tesla has little in common with these tech giants' businesses, it does similarly trade with a very forward-looking valuation, making Tesla, Amazon, and Netflix more volatile than conservatively priced large-cap stocks.

Confirming the correlation of Tesla's stock price and the broader market sell-off, Tesla regained most of it losses just as the S&P 500 recovered.

AMZN Price Chart

AMZN Price data by YCharts

Now what

As a growth stock, Tesla shares will likely see significant volatility amid most meaningful swings in the broader stock market. But investors should stay focused on the underlying fundamentals.

In 2018, Tesla investors will want to ensure the Model 3 production ramp goes well and that the company begins reporting operating income on a consistent basis.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
$737.12 (4.53%) $31.91
Netflix, Inc. Stock Quote
Netflix, Inc.
$190.85 (5.03%) $9.14, Inc. Stock Quote, Inc.
$116.46 (3.58%) $4.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.