Tesla Shares Experience Historic Decline Amid Sales Challenges

Tesla shares have dropped 7.5% this week, marking its worst performance since the 2020 election. Sales in Germany, France, the UK, and China plummeted, leading to a 22% decline from the stock’s December peak. Market analysts express caution yet forecast potential recovery opportunities in coming weeks.

Tesla Inc. is on track for its worst weekly performance since the US presidential election, with shares dropping 7.5% through Thursday’s close due to alarming global sales reports. Notably, sales in Germany fell to the lowest level since 2021, while France and the UK also experienced declines. Meanwhile, deliveries in China, a significant market for Tesla, decreased by 11.5% year-over-year, compounding the company’s challenges as rival BYD Co. flourished this week.

Tesla’s stock has plunged 22% from its record high closing price of $408.09 on December 17, a peak reached post-Trump’s election victory. This downturn is attributed to the increasing complexities of operating as an electric vehicle manufacturer amid shifting governmental policies and the growing public scrutiny of CEO Elon Musk’s personal politics. Analysts speculate that Musk’s political affiliations may negatively impact Tesla’s sales performance, particularly in Europe.

The weak European sales are seen as partially linked to Musk’s political activities, including his support for a far-right party in Germany and conflicts with key political figures in the UK. With Trump intensifying tariffs and trade negotiations with Europe and North America, it remains uncertain how this will impact Tesla’s future performance. Mike O’Rourke, chief market strategist at Jonestrading, stated, “There is an argument to be made that Tesla is beginning to be penalized for Musk’s close relationship to Trump.”

Despite the current struggles, some investors remain hopeful that Musk’s ties with the federal government may ultimately facilitate favorable conditions for Tesla’s advancements, such as in self-driving technology. Nevertheless, Tesla’s stock performance has been disappointing compared to other giants in the tech industry, marked by its status as the heaviest underperformer in the Bloomberg Magnificent Seven Index.

Looking ahead, market analysts suggest caution, indicating it might be beneficial for investors to wait before investing further into Tesla. Mark Newton, head of technical strategy at Fundstrat, predicts that although the stock might find a bottom within three weeks, the prevailing downward trend indicates further price declines are possible. He noted a potential buy opportunity around $350 per share as the stock traded near $374 at Thursday’s close.

The article discusses Tesla’s stock performance amid declining sales figures, particularly in key international markets. Following the US presidential election, the stock initially surged but has since faced significant challenges due to waning demand for electric vehicles and Elon Musk’s controversial political connections. The broader implications of these factors on Tesla’s sales and investor sentiment are highlighted as the market evaluates future potential.

In summary, Tesla’s stock is facing its most significant decline since the last presidential election, largely attributed to declining sales in major markets. The interplay between Elon Musk’s political activities and consumer confidence contributes to this downturn. While analysts suggest potential investment opportunities may arise, current trends warrant caution among investors. Tesla’s ability to navigate these challenges amidst a versatile market landscape remains critical to its financial recovery.

Original Source: financialpost.com