Tesla Stock Tumbles as Investors Focus on Fundamentals Amid Musk-Trump Connection
Key Takeaways:
* Tesla (TSLA) shares have declined 28% since reaching a record high in December 2024.
* Investor sentiment has been dampened by concerns about Tesla's sales in key overseas markets and the impact of political factors on its brand.
* Tariffs imposed by President Trump on steel and aluminum, as well as China's trade war, are raising costs for Tesla and other EV makers.
Tesla's Stock Performance
After rising to a record high of $487.22 on December 18, 2024, TSLA shares have been on a downward trajectory. As of February 2025, the stock is trading at $349.18, a decline of approximately 28%. This underperformance relative to the "Magnificent Seven" index, which includes companies like Meta, Amazon, and Microsoft, has raised concerns among investors.
Factors Affecting Tesla's Stock
* Subdued Sales in Overseas Markets: Tesla's sales in China and Australia have declined significantly in recent months, raising questions about the impact of Elon Musk's close relationship with President Trump on the company's brand reputation.
* Tariffs and Trade War: The tariffs imposed by Trump on steel and aluminum are increasing costs for Tesla and other EV manufacturers. Additionally, China's trade war is affecting the supply chain for Tesla's batteries.
* Fourth Quarter Earnings Disappointment: Tesla's fourth quarter earnings missed analyst estimates, as automotive sales declined and margins were weak. Moreover, the rollout of its full self-driving feature in Europe and China has been delayed.
Analyst Sentiment
Analysts have downgraded earnings per share estimates for Tesla in the wake of its underwhelming earnings report. Deutsche Bank analyst Edison Yu highlights the risk of demand stagnation related to EV fatigue and competition. JPMorgan analyst Ryan Brinkman, who has an Underperform rating and $135 price target for TSLA, advises caution due to the potential for "mean reversion" in the stock price.
Overall, investors are becoming increasingly concerned about the fundamentals of Tesla as they weigh the impact of political factors, geopolitical tensions, and the competitive landscape on the company's long-term prospects.