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Why Tesla Stock Is Falling Again Today

By Daniel Sparks – Updated Sep 3, 2020 at 10:43AM

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Investors continue to take their profits on the electric-car maker's stock following its monstrous rally.

What happened

Shares of electric-car company Tesla (TSLA 0.25%) are trading sharply lower again today. The stock fell as much as 9.5% but is down 6.5% as of 10:25 a.m. EDT.

The growth stock's decline likely reflects a continuation of a breather it seems to be taking after rallying about 1,000% between August 2019 and August 2020.

A chart showing a stock price moving lower

Image source: Getty Images.

So what

This marks the third day in a row that the stock has declined by more than 3%.

Earlier this week, Tesla announced it was raising capital by issuing new shares. The automaker set out to raise $5 billion of funds with the capital raise. The company's willingness to dilute its stock in exchange for cash may have signaled to the market that the automaker thought its shares were overvalued.

It's not surprising, of course, to see the stock come down after soaring sharply higher over the last 12 months. The stock's gains following a stock split announcement in early August were borderline irrational.

Now what

Long-term Tesla investors certainly aren't hurting. Even including the stock's pullback this week, shares are up more than 800% over the last 12 months.

The market's expectations for the company remain high. Investors should look for the automaker to meet or exceed its target for 500,000 deliveries this year -- up from about 368,000 last year. In addition, investors should watch for continued progress on the construction of its factories in Berlin, Germany, and Austin, Texas.

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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