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Why Tesla Stock Fell (Again) Monday

Daniel Sparks, The Motley Fool

What happened

Shares of electric-car company Tesla (NASDAQ: TSLA) took a hit Monday, falling as much as 5.7%. But shares were down just 1.6% as of 1:26 p.m. EDT.

The price decline extends a rough period for the stock, which has fallen about 21% since shares spiked earlier this month, when CEO Elon Musk said he was considering taking the automaker private at $420 per share. The slide has been fueled by doubts about Musk's plans to take the company private, as well as concerns about Musk's leadership.

The Tesla stock decline on Monday is likely tied to a lowered price target from an analyst at JPMorgan Chase.

Four Tesla vehicles -- the Model 3, Tesla Semi, Model S, and Model X

Tesla vehicles. Image source: Tesla.

So what

J.P. Morgan analyst Ryan Brinkman lowered his price target for Tesla stock from $308 to $195, citing doubts about the company's plans to go private.

"Tesla does appear to be exploring a going private transaction, but we now believe that such a process appears much less developed than we had earlier presumed, suggesting formal incorporation into our valuation analysis seems premature at this time," said Brinkman.

Now what

Significant uncertainty surrounding Tesla's potential privatization has put investors in a tough spot, since they have very little concrete information to help inform views of this potential deal.

In an Aug. 14 filing with the Securities and Exchange Commission, Tesla said it had "not yet received a formal proposal from Mr. Musk regarding any Going Private Transaction nor has it reached any conclusion as to the advisability or feasibility of such a transaction."

Investors should keep an eye out for any updates from Tesla on its possible privatization.

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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.