Tesla Stock Plummets Over 8%, Erasing Post-Election Gains Amid Concerns

Tesla shares fell over 8%, erasing post-election gains and losing more than 50% since December’s peak. Concerns include CEO Elon Musk’s political involvement, weak sales in China and Europe, and declining fourth-quarter deliveries. Analysts are divided on stock recommendations, with a notable reduction in UBS’s price target and delivery estimates.

Tesla shares experienced a significant decline of over 8% on Monday, ranking among the leading decliners on the S&P 500 during early trading. This decline has resulted in the stock falling below its pre-election levels and represents a loss of more than half its value since peaking at $479.86 on December 17, 2020. Given that the stock has now retreated to the point of erasing all post-election gains following President Donald Trump’s victory, investor sentiment remains particularly bearish.

The drop in Tesla’s stock can be attributed to several factors, including a weak performance in fourth-quarter deliveries and earnings, uncertainties surrounding tariffs under the Trump administration, as well as declining sales and registrations in pivotal markets like China and Europe. Furthermore, there is a strong sense of concern among analysts and investors regarding CEO Elon Musk’s involvement in the Trump administration, particularly its potential impact on Tesla’s brand and sales as protests against the company’s dealerships escalate.

Analysts’ opinions on Tesla’s stock are markedly mixed, with the 19 brokers monitored by Visible Alpha showcasing a split in ratings: 10 recommend “buy,” five advocate for “hold,” and four suggest “sell.” Notably, UBS analysts have maintained a “sell” rating and have adjusted their price target for the stock downward from $259 to $225, while also reducing their estimates for first-quarter deliveries to 367,000, down from a previous forecast of 437,000. They assert that while the forthcoming Model Y and a lower-cost model may stimulate sales, initial demand for the Model Y appears to be somewhat subdued, leading to expectations that any lower-cost vehicle may yield reduced profit margins.

In summary, Tesla’s recent stock performance reflects notable concerns surrounding the company’s leadership decisions, market challenges, and a shift in investor confidence following significant losses in share value. With divided analyst ratings and lowered forecasts, the outlook for Tesla remains cautious, particularly in light of potential impacts from political affiliations and market competition.

Original Source: www.investopedia.com