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Why Tesla Stock Jumped Again on Thursday

By Daniel Sparks – Updated Sep 10, 2020 at 11:57AM

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Following a sharp decline in early September, the stock's rebound has extended to another trading day. But shares are still down sharply for the month.

What happened

On Thursday, shares of electric-car maker Tesla (TSLA 0.08%) continued to rebound from their worst one-day sell-off on record earlier this week. The stock jumped as much as 8.9%, but as of 11:15 a.m. EDT today, it had settled to about a 6% gain.

The move higher on Thursday extends Wednesday's rally for the growth stock. Based on this two-day rebound, investors seem to believe that Tesla shares were oversold during a big sell-off on Tuesday, creating a buying opportunity.

Model X interior

Tesla Model X. Image source: The Motley Fool.

So what

Until Wednesday, Tesla was seeing significant selling pressure this month. The stock appeared to be taking a breather after a wild run higher. It had gained about 500% between the end of 2019 and Aug. 31 -- a move that seemed to persuade some shareholders that it was time to do some profit-taking.

But after the September sell-off worsened on Tuesday, when the stock slid about 21% in a single day, some investors appear to be aggressively buying shares.

Now what

While Tesla is still down 19% in September, investors should keep in mind that the growth stock certainly isn't cheap. The company trades at about 17 times sales, up from a multiple of about eight as recently as a few months ago and a multiple of three just last year. With the stock's valuation changing so quickly, continued volatility is almost inevitable. 

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.

Stocks Mentioned

Tesla Stock Quote
$194.86 (0.08%) $0.16

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