Please ensure Javascript is enabled for purposes of website accessibility

Why Tesla Stock Fell Again on Friday

By Daniel Sparks – Sep 4, 2020 at 1:18PM

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

The electric-car maker's shares are getting pummeled this week.

What happened

Shares of Tesla (NASDAQ: TSLA) tumbled again on Friday. As of 12:27 p.m. EDT, the stock is down more than 1%, trading at about $400, but it declined to as low as $372.05 at one point during the trading day.

The stock's pullback extends a downtrend for Tesla so far in September as many growth stocks have been falling sharply following a huge run-up in their share prices since April.

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

Image source: Tesla.

So what

Tesla stock is down more than 15% in September.

It's not surprising to see Tesla investors taking their profits, as the stock rose 500% between the beginning of the year and the end of August. Tesla's rapid gains in August, in particular, were arguably becoming irrational, as the primary news seeming to drive the stock higher was a stock split -- a structural change to shares that, in theory, does nothing to make them more valuable.

Tesla's stock has also likely been declining because of a broader market sell-off in recent trading days that has been largely driven by profit-taking in growth stocks. Many growth stocks have significantly outperformed the market this year and it's reasonable to see them taking a breather after their impressive gains.

Now what

Investors should expect more significant volatility in Tesla shares in the coming days, weeks, and even months. Given its pricey valuation, which prices in years of rapid business growth, changes in investor sentiment about the company's long-term potential can have huge impacts on the company's share price.

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.

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

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

Stock Advisor Returns
351%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/29/2022.

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.