Tesla Stock Got Hammered at the End of a Very Good Week. 3 Reasons for Friday's Fall.

Shares of the electric vehicle maker closed down 8.5% on Friday at $210.73. The S&P 500 and Dow Jones Industrial Average fell 1.7% and 1%, respectively. Most of the decline wasn’t due to Tesla-specific news.

Instead, investors are digesting the latest data on the labor market released on Friday. The U.S. added 142,000 jobs in August, lower than the 160,000 economists expected, according to FactSet. It’s another sign the U.S. economy and labor markets are weakening.

Auto sales aren’t helping either. Americans purchased cars at an annual rate of 15.1 million units in August, down from 15.8 million in July. Economists were expecting about 15.5 million. (Monthly car sales are typically reported at an annual rate.) BNP Paribas analyst James Picariello called the auto sales number “lackluster” in a Thursday research report.

Tesla stock might have dropped because it was up a lot in recent days. Coming into Friday trading, shares had gained three of the past four trading days, up almost 12% over that span. Each daily gain has been more than 3%.

Shares rallied partly because of optimism about artificial intelligence. Tesla CEO Elon Musk said in a post on X earlier in the week that “there will be so many robots” in the future. On Thursday, Tesla announced plans to offer its highest-level driver-assistance product, called Full Self Driving, in Europe and China early in 2025.

Both of those announcements have to do with the company’s AI plans. Tesla is using AI computers to train humanoid robots that it eventually wants to sell; the company also says its autonomous driving software will eventually be good enough for Tesla to produce truly self-driving cars. The company’s driver-assistance products still require human oversight 100% of the time.

Tesla is hosting a Robotaxi day on Oct. 10 in Hollywood to demonstrate more of its self-driving technology.

“While we are bullish on the very long-term potential for autonomous vehicles to transform surface transport networks, we urge our clients to keep expectations well managed for the near term,” wrote Morgan Stanley analyst Adam Jonas in a Thursday report.

He expects to see a demonstration of Tesla software and a fully autonomous “cyber-cab.” But there is still a way to go before Tesla is managing a self-driving taxi network. The company “has a permit for autonomous vehicle testing with a driver but does not currently hold a permit for autonomous vehicle testing or deployment without a driver,” added the analyst.

He rates Tesla shares Buy and has a Street-high $310 price target for shares among large brokers, according to FactSet.

Through Friday trading, Tesla stock dropped 1.6% for the week. The S&P 500 was down more than 4%. Shares were down about 15% so far this year. Falling EV sales have weighed on investor sentiment. Tesla shipped about 831,000 cars in the first half of 2024, down about 7% year over year.