Please ensure Javascript is enabled for purposes of website accessibility

Why Tesla Stock Fell Sharply on Monday

By Daniel Sparks - Updated Feb 22, 2021 at 5:39PM

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

Most of the stock's gain this year has been erased.

What happened

Shares of Tesla (TSLA 4.88%) were pummeled on Monday. The stock closed the trading day down about 8.6%

The automaker's stock decline was likely primarily due to a pullback in the overall market on Monday. Many growth stocks like Tesla were hit particularly hard.

A chart showing a stock price falling.

Image source: Getty Images.

So what

Volatility should be expected from Tesla stock. It soared 743% last year as it won over Wall Street's attention. Tesla's sales jumped, and the company demonstrated strong profits. Also likely helping the stock price last year was a big year for growth stocks in general. Many such stocks soared 50% or more in 2020.

But growth stocks were taking a breather on Monday as the Nasdaq Composite fell 2.5%.

Most of Tesla's gains this year have evaporated. Shares are now up just 1.5% in 2021.

Now what

Tesla's underlying business will likely continue to grow rapidly this year. Indeed, management guided for vehicle deliveries to increase from about 500,000 in 2020 to more than 750,000 this year.

But with a very optimistic business view already priced into Tesla shares, it's difficult to predict where the stock could end up at the end of 2021.

There's one thing we can expect with near certainty: plenty more volatility.

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

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
$658.80 (4.88%) $30.64

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

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.