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Why Tesla Stock Fell Sharply Wednesday

By Daniel Sparks - Feb 5, 2020 at 1:49PM

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Ouch! Shares of the electric-car maker just got slammed. Here's why.

What happened

Shares of electric-car maker Tesla (TSLA -2.05%) fell on Wednesday. As of 12:30 p.m. EST, the stock was down 15%.

The stock's pullback comes as several analysts express concerns about valuation. Further, the company said it is delaying deliveries of Model 3 vehicles in China, citing the coronavirus outbreak. Of course, it's also a natural time for the stock to take a breather; even including the stock's fall on Wednesday, shares are up 140% in the past three months and 70% in the last 30 days.

A white Model S driving in mountains

Model S. Image source: Tesla.

So what

Canaccord Genuity analyst Jed Dorsheimer cut his rating on Tesla stock from buy to hold on Wednesday, maintaining a 12-month price target of $750. He cited the stock's pricier valuation after its run-up, as well as headwinds in China at the company's factory in Shanghai. 

Meanwhile, Morgan Stanley analyst Adam Jonas said the stock's meteoric rise has led to "more questions than answers" for investors as they try to understand the automaker's current valuation. 

Now what

Tesla said on Chinese social network Weibo that vehicles scheduled for delivery in the market in early February will be delayed. "We will catch up the production line once the outbreak situation gets better," explained vice president of Tesla Global Tao Lin.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool recommends Weibo. The Motley Fool has a disclosure policy.

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