Tesla Shares Experience Worst Weekly Decline Since Election Amid Sales Slump
Tesla shares have declined 7.5% this week, which marks its worst weekly performance since the 2020 election. Disappointing sales reports globally, particularly in Germany, France, and China, coupled with Musk’s political affiliations, have impacted the stock’s performance. Analysts offer mixed recommendations, indicating a potential buying opportunity if prices drop further in the coming weeks.
Tesla Inc. shares have dropped 7.5% this week, marking its worst weekly performance since the 2020 presidential election. This decline follows disappointing global sales figures, particularly in Germany, where sales reached the lowest levels since 2021. Additionally, France and the UK reported sales declines, while Tesla’s deliveries in China fell 11.5% year over year, amidst a competitive surge from local rival BYD Co. which experienced a significant uptick in performance this week.
The stock has now decreased by 22% since reaching a record closing high on December 17, 2020. This peak was achieved after an initial surge due to favorable market conditions post-election, as Elon Musk gained prominence as a key figure under the Trump administration. However, with a shift in political focus, Tesla is facing the challenges of operating within an environment less favorable to the electric vehicle industry.
The recent downturn in European sales may reflect the impact of Musk’s political affiliations. His support for extreme-right ideologies in Germany, along with recent confrontations with UK leadership, coincided with disappointing sales results in Europe’s largest markets. Mike O’Rourke from Jonestrading noted, “There is an argument to be made that Tesla is beginning to be penalized for Musk’s close relationship to Trump.”
Despite uncertain sales prospects, some investors maintain hope that Musk’s ties with the former president could facilitate regulatory advantages for upcoming projects like self-driving technology. Nevertheless, Tesla has lagged behind other major tech stocks, being the most expensive to hold among the Bloomberg Magnificent Seven Index, despite a significant reduction in its share price.
Market analysts suggest that further declines may be imminent, advising investors to bide their time before purchasing. Mark Newton, head of technical strategy at Fundstrat, indicated a potential bottoming out for Tesla within the next few weeks, although he stressed that the current short-term trend remains downwards. The anticipated share price level to watch is around $350, as shares traded near $374 on Thursday.
Tesla Inc., a leading electric vehicle manufacturer founded by Elon Musk, has faced considerable market challenges in recent months, particularly regarding sales performance across key markets. Following a significant surge in stock prices after the 2020 presidential election, the company is now confronting headwinds, including competitive pressure in China and diminishing sales in Europe. These elements are compounded by Musk’s contentious political associations and changing government regulations surrounding the electric vehicle industry.
In summary, Tesla has experienced a notable decline in stock performance amid disappointing sales reports globally. The company’s challenges appear to correlate with Elon Musk’s political affiliations and current market competition. Analysts remain divided on investment strategies, suggesting potential near-term price corrections while maintaining cautious optimism for long-term recovery.
Original Source: financialpost.com
