Why Tesla Stock Fell Sharply on Friday

admin 2021.03.26 15:21 Views : 348

What happened

Shares of Tesla (NASDAQ:TSLA) took a hit on Friday. At its worst point during the trading day, the stock was down 6.3%. However, by the time the market closed, shares were down 4.4%.

The growth stock's decline extends a big pullback for the stock recently, largely driven by growing negative sentiment in the market about the valuations of stocks like Tesla that soared in 2020. Investors seem to be doing some profit-taking.

A woman unlocking her Tesla vehicle with a mobile app

IMAGE SOURCE: TESLA.

So what

Many growth stocks have been falling since about mid-February. The market seems to have decided it was time to do some profit-taking on these stocks after an enormous run in 2020 and the first six weeks of this year. Though many growth stocks rebounded a few percentage points on Friday, not all of them did. Further, most growth stocks are still down sharply from levels in February.

Without any major developments regarding Tesla specifically on Friday, fear amid a big pullback for the stock was likely the primary driver for the decline.

Of course, shares are still up 640% since the beginning of 2020.

 

Now what

Tesla shares do trade at a pricey valuation, making them look like they may be significantly overvalued. Investors should consider that management expects vehicle deliveries to grow more than 50% this year. Indeed, Tesla has said it expects to sustain an average compound growth rate of about 50% for its vehicle deliveries for the foreseeable future.

In addition, Tesla is now generating substantial free cash flow. This means it not only has big growth opportunities in front of it, but it can primarily fund those opportunities with internally generated cash flows.

Tesla's stock may be down, but its business is thriving.

No. Subject Author Date Views
41 (ATVI) Activision Blizzard admin 2021.08.03 323
40 (AAPL) Apple admin 2021.08.03 296
39 (TSLA) Tesla admin 2021.08.03 313
38 (SOFI) SoFi Technologies admin 2021.08.03 319
37 (OPEN) Opendoor Technologies admin 2021.08.03 340
36 (FUBO) fuboTV admin 2021.08.03 315
35 Here's Why Tesla, Moderna, Peloton And Zoom Are Moving admin 2021.04.13 596
34 Tesla 'Bringing A Machine Gun To A Knife Fight,' Canaccord Genuity Analyst Says admin 2021.04.12 363
33 China Car Sales Soar to Pre-Pandemic Levels; Tesla has its best month in the country, as demand for electric vehicles stand out in the market admin 2021.04.09 385
32 Removal of EV Tax Credit Ceiling Could Bode Well for Tesla -- Market Talk admin 2021.04.05 430
31 Benzinga's Bulls And Bears Of The Week admin 2021.04.03 345
30 Financial performance - TESLA admin 2021.03.29 326
» Why Tesla Stock Fell Sharply on Friday admin 2021.03.26 348
28 Jim Cramer has some thoughts on the markets. admin 2021.03.22 340
27 TSLA CALL OPTION $700.00 strike March 26, 2021. admin 2021.03.22 468
26 Billionaire investor Ron Baron’s firm sold 1.8 million Tesla shares admin 2021.03.04 417
25 Why Tesla Took Off Standard Range Model Y From Its Offerings admin 2021.02.23 389
24 Cathie Wood's ARK Invest Posts Fund Purchases For Monday, Feb. 22, 2021: DCYHF, FB, OPEN, SURF, RPTX, REGN, EXAS, CMLF, SGFY, U, TXG, TWTR, TSLA, SPOT, PYPL, BEAM, FATE, RAVN, EXPC admin 2021.02.22 1421
23 Tesla, PG&E's Giant Battery Pack Project In California Is Almost Finished: Video admin 2021.02.22 392
22 Melvin Capital boss Gabe Plotkin is a bad guy admin 2021.02.18 366