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Why Tesla Stock Fell Sharply on Tuesday

By Daniel Sparks - Apr 21, 2020 at 12:52PM

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Growth stocks like Tesla seem to be taking a breather following sharp gains recently.

What happened

Shares of electric-car maker Tesla (TSLA -2.05%) tumbled on Tuesday, declining as much as 9.7%. As of 12:23 p.m. EDT, however, the stock was down 6.7%.

The primary reason for the stock's decline is bearishness in the overall market. A sell-off in the broader market on Tuesday is hitting growth stocks like Tesla particularly hard.

A red Model 3 driving at sunset

Model 3. Image source: Tesla.

So what

The S&P 500 index was down 3% as of this writing, with many growth stocks getting hit even harder. The market seems to be taking a breather this week after quickly recovering some of the ground it lost in the coronavirus market sell-off in late February and the first few weeks of March.

The decline in the electric-car company's share price adds to weakness in the stock this week following wild gains in recent weeks. Even including today's pullback, the stock is up 93% since March 18.

Now what

Investors will have a close eye on Tesla this month, as the company is scheduled to report its first-quarter results on April 29. The Street will be watching to see how the coronavirus pandemic has impacted the company.

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

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