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Why Tesla Stock Fell 7.9% This Morning

By Daniel Sparks – Sep 21, 2020 at 12:30PM

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Are the electric-car maker's third-quarter deliveries tracking below expectations?

What happened

Shares of Tesla (TSLA 2.56%) fell sharply on Monday morning, declining as much as 7.9%. As of 11:30 a.m. EDT, however, the stock was only down 2%.

The growth stock's decline was likely driven primarily by a broader market sell-off on Monday and worries that third-quarter deliveries could be lower than expected. But shares may be recovering much of this loss because investors are looking forward to the electric-car maker's Battery Day event tomorrow, which is expected to include some important product news regarding Tesla's recent innovation in battery technology.

A woman unlocks her Model 3 with a Tesla app on her smartphone

A Tesla Model 3. Image source: Tesla.

So what

Highlighting bearishness in the overall market on Monday, the S&P 500 is down about 2.6% as of 11:30 a.m. EDT. It wasn't surprising to see Tesla stock falling even more than the broader market, as shares have risen more than 800% over the past 12 months. With such an incredible gain behind it, investors should expect significant volatility for the automaker's stock.

Another possible reason for pessimism toward Tesla stock on Monday morning could have been news of a leaked email from CEO Elon Musk to employees that said record deliveries for the quarter were within reach. This implied that deliveries during the period could be on pace to be around Tesla's previous quarterly record of approximately 112,000 vehicles. Many investors and analysts were expecting significantly higher deliveries. 

Now what

Perhaps helping the stock regain some of its loss on Monday morning, investors are eagerly awaiting Tesla's Battery Day event tomorrow afternoon. It's rumored the electric-car company will unveil new battery cell chemistry and perhaps a higher-volume battery production system.

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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