Please ensure Javascript is enabled for purposes of website accessibility

Why Tesla Stock Fell, Then Recovered on Tuesday

By Daniel Sparks - Updated Mar 17, 2020 at 1:02PM

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

Though shares have fallen sharply from their all-time high, the electric-car maker is still up more than 80% over the past six months.

What happened

By 10 a.m. EDT on Tuesday, shares of Tesla (TSLA 7.33%) had tanked. The stock was down more than 10%. But as of 12:25 p.m. EDT, shares of the electric-car maker had erased all of those losses.

The stock's volatility comes amid more wild swings in the overall market as investors try to predict the impact that the coronavirus is going to have on the economy and on individual markets.

Tesla's Model S, 3, X, and Y

Tesla's model range. Image source: Tesla.

So what

Tesla's initial big decline on Tuesday came alongside a sell-off in many growth stocks. In addition, the overall market briefly turned negative, albeit only slightly, around 10 a.m. EDT. The S&P 500 had fallen about a half of a percent. But the market rebounded throughout the day. As of 12:33 p.m. EDT, the S&P 500 was up 5.3%.

Shares of Tesla are significantly cheaper than they were in early February. The stock had reached an all-time high of about $969, but now shares are trading at about $441. The stock is still up 84% in the last six months, compared with a 16% decline in the S&P 500 over this same time frame.

Now what

It's unclear how much the coronavirus outbreak will hurt Tesla's production and sales. One analyst argued earlier this week that sales will be hurt as demand for luxury autos is negatively impacted during these times of uncertainty.

When Tesla reports its first-quarter deliveries in the first few days of April, investors should look for an update on production, deliveries, and demand.

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.
TSLA
$759.63 (7.33%) $51.90

*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 service.

Stock Advisor Returns
356%
 
S&P 500 Returns
124%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

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.