Shares of Tesla, which had been soaring since Donald J. Trump’s election victory, plummeted by 8 percent on Tuesday erasing the gains made since Trump’s win. Investors who believed that Tesla would benefit from Elon Musk’s support for the Trump campaign were now concerned about Musk’s focus on politics and cost-cutting measures, leading to a decline in Tesla’s market value below $1 trillion.
The drop in Tesla’s stock was also due to a significant decline in European sales, which fell by 50 percent in January compared to the previous year. This decline comes as the overall market for electric vehicles in Europe surged by 34 percent. Some analysts, including Gary Black, have expressed skepticism about Tesla’s performance, citing disappointing sales of the Cybertruck and price cuts on other models.
Wall Street analysts viewed the drop in Tesla shares as a return to the trend before the post-election rally, with concerns about the company’s ability to meet its sales growth forecasts. Analysts also highlighted the potential impact of Musk’s political activities on Tesla’s brand resonance with consumers.
While there is no tangible evidence yet of weakening brand perception in the U.S., there are concerns that this may be happening in Europe, where Tesla faces increasing competition from European and Chinese manufacturers offering comparable electric models. Overall, the recent performance of Tesla has raised doubts among investors about the company’s future prospects.
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