Tesla's Stock Plunges Amidst Economic Headwinds
Pre-Market Drop
Tesla (TSLA) shares extended their decline on Wednesday, falling 2% to $321 in pre-market trading. This downward trend has been ongoing since Tesla's recent 52-week high. At current prices, the stock has lost 33% since its record high on December 18, 2024.
Underperformance and Impact on Musk's Wealth
Tesla is the worst-performing stock among the "Magnificent Seven" tech megacaps, which includes Meta, Amazon, Microsoft, Nvidia, Alphabet, and Apple. Elon Musk's net worth, which is tied to Tesla's fortunes, has dropped $54 billion year-to-date. He remains the world's richest person, with a net worth of $378 billion.
Market Concerns
Analysts attribute Tesla's decline to several factors, including:
* Soft sales in key overseas markets, including China and Australia.
* Concerns about potential brand damage due to Musk's association with former President Donald Trump.
* New tariffs imposed by the Trump administration, increasing costs for automakers.
* A disappointing fourth quarter, with missed earnings estimates and reduced automotive sales.
Valuation and Long-Term Outlook
Tesla's forward price-to-earnings ratio remains high at 111 times, compared to 22 times for the S&P 500. Analysts believe this valuation is challenging to justify, especially in light of the company's recent performance. Some analysts question whether Tesla can deliver on ambitious promises such as robotaxis and humanoids in the near term, which could further impact its valuation.