Why Tesla Stock Fell Sharply Friday Morning

What happened

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Shares of electric-car maker Tesla (NASDAQ:TSLA) fell Friday morning, declining 5% a few minutes into market open. However, by 9:50 a.m. EDT, the stock was down just 3%.

The growth stock’s decline follows Tesla’s report of its third-quarter vehicle deliveries. But shares may be primarily down for another reason, namely bearishness in the overall stock market on Friday.

So what

Tesla announced it had delivered 139,300 vehicles in Q3, beating analysts’ average forecast for 137,000 deliveries. This was more than the company has delivered in any other quarter. Highlighting Tesla’s impressive growth, the quarter’s deliveries were up 43% year over year and 53% sequentially.

It’s possible that Tesla’s quarterly vehicle deliveries were underwhelming to some investors even though they exceeded analysts’ average forecast. But what is more certainly weighing on the stock on Friday was a decline in the overall market, spurred by a worse-than-expected jobs report and news last night that President Donald Trump and the first lady had tested positive for the coronavirus.

As of this writing, the Nasdaq is down 1.2% and the S&P 500 is down 0.8%.

Now what

Tesla’s better-than-expected third-quarter deliveries puts the company’s full-year target for 500,000 deliveries within reach, but it’s still not a guarantee. The company will have to deliver more than 181,000 vehicles in the fourth quarter to hit this target.

Tesla has been ramping up production and deliveries of both the Model 3 and the Model Y globally. The Model Y’s fresh addition to Tesla’s vehicle lineup in March will likely play a key role in any sequential growth in Q4. The automaker is likely still ramping up production and deliveries of the new vehicle.