Why Tesla Stock Fell Monday

Some investors are taking profits on the electric-car maker's stock after an astronomical run-up.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Tesla (NASDAQ: TSLA) are taking a hit on Monday. Shares fell as much as 8.7% and are down 7.8% as of 12:15 EST.

The stock's decline comes as the broader market sells off on Monday due to fears about the spread of the coronavirus to South Korea and Italy. At the time of this writing, the S&P 500 is down 3% and the Nasdaq Composite is down 3.6%.

So what

Of course, Tesla stock's 7.8% decline is worse than the market's sell-off on Monday. However, this outsize decline isn't surprising. Even including the stock's pullback today, shares are still up nearly 300% in the past six months alone. This market pullback may have sparked a large number of investors deciding to pocket some gains after such an enormous run-up.

Further, some investors may be worried about the impact of the virus' outbreak on Tesla's factory in China. The electric-car maker recently reopened its factory in Shanghai after an extended shutdown due to coronavirus concerns. But there's always a chance the factory could be shut down once again.

Now what

Tesla was counting on its recently launched factory in Shanghai to provide a boost to sales in 2020 by building more Model 3 vehicles for the China market. However, Tesla said in its fourth-quarter earnings call that it had sufficient cash to continue its expansion plans even in the face of headwinds in the country -- and this was notably said before the company raised $2.31 billion more dollars in a well-timed stock offering.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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