Why Tesla Stock Fell on Monday

MarketsMotley Fool

What happened

Shares of Tesla (NASDAQ: TSLA) were rocked Monday. The stock fell as much as 6% and finished the trading day down 4.7%.

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The stock's decline was likely primarily due to a broader-market sell-off that hit high-growth tech stocks particularly hard.

So what

The S&P 500 fell about 2.1% on Monday as fears mounted about the Federal Reserve's meeting later this week. With the Fed expected to raise short-term interest rates at its policy meeting on Wednesday, some investors fear higher rates could present headwinds for some companies and ultimately lead more investors to incrementally move money away from stocks and into treasuries.

Tesla stock's decline on Monday isn't surprising, as its shares had surged recently. The stock, therefore, may be taking a breather as investors take gains as broader-market concerns mount. Even when including today's pullback for Tesla stock, its shares are up 13% since Oct. 1. During this same time frame, the S&P 500 fell about 13%.

Now what

Company-specific factors may become the main drivers for Tesla stock in the coming weeks. Within the first few days of January, Tesla is set to report vehicle deliveries for its fourth quarter. Management was optimistic about the period, guiding for slightly more Model 3 deliveries during the period than in the third quarter -- a notable target considering the company hasn't proven yet that it can sustain its higher levels of Model 3 production. Management's guidance implies an 88% year-over-year increase in Model 3 deliveries or greater.

Worse-than-expected Model 3 deliveries for Tesla's fourth quarter could lead to a sell-off in the company's shares, as investors have already priced in optimistic growth expectations.

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Daniel Sparks owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.