Tesla’s stock has dropped significantly, erasing $700 billion in gains since the Trump election victory, with significant declines in vehicle sales and concerns over Musk’s political focus. Analysts suggest a potential recovery amidst ongoing valuation concerns and economic challenges.
Tesla’s stock has experienced a significant decline, erasing $700 billion in gains obtained since the 2016 US presidential election. The shares dipped by up to 4.6% on Friday morning before a slight recovery. The company’s stock has fallen over 28% in the past month and nearly 32% year-to-date, marking a stark contrast to its previous performance following Donald Trump’s election victory.
Initially, Tesla thrived post-election due to optimistic sentiments regarding CEO Elon Musk’s connections to the Trump administration. However, these hopes have diminished as concerns arise regarding Tesla’s actual vehicle sales. A notable drop in quarterly sales for the first time in ten years, combined with losses in key markets such as Europe and China, has contributed to dwindling investor confidence.
Investors are also wary of Musk’s increasing political involvement, which some believe detracts from his role at Tesla. As Adam Sarhan from 50 Park Investments stated, “The bet on Tesla’s shares soaring due to Musk’s political involvement has not worked out thus far.”
The current market dynamics are further complicated by broader economic challenges. Following the election, speculative trading had inflated stock values, but worries about US trade and economic stability have led to declines in major indexes, such as the S&P 500 and Nasdaq 100, with respective drops of over 7% and entry into correction territory.
Adding to the pressure, a downgrade from Apple America analyst John Murphy reduced Tesla’s stock target price from $490 to $380, citing sluggish new car sales and uncertainties about vehicle affordability and the robotaxi initiative. Despite this downturn, technical analysts note the stock is in an “oversold” zone, potentially setting the stage for a recovery if sales improve or new updates are provided.
Notably, Tesla’s elevated forward price-to-earnings ratio is currently at 88, far exceeding the S&P 500’s 21. As highlighted by Matt Maley from Miller Tabak + Co., “Tesla’s forward price-to-earnings ratio is still very close to 90,” suggesting the shares remain expensive relative to earnings potential.
As Tesla navigates this uncertain market environment, investors must decide whether the recent selloff offers a buying opportunity or signals deeper ongoing challenges.
In summary, Tesla’s stock has experienced a sharp decline, wiping out substantial gains from the past election period, primarily due to poor sales performance and economic uncertainty. Analysts predict a potential rebound if sales recover or if strategic updates are made, yet concerns over valuation remain. Investors face critical decisions as the company’s future trajectory becomes increasingly uncertain.
Original Source: nypost.com
