After surging in the wake of last November’s presidential election, Tesla stock has gone into freefall since Donald Trump’s inauguration last month. A variety of factors, including slumping global sales linked to CEO Elon Musk’s increasingly tarnished reputation. His new $100 billion bid for OpenAI may add to investors’ worries, reports Headlight.News.
Shares of Tesla continued to lose momentum Tuesday morning, extending a downward slump that began about the time Pres. Donald Trump returned to the White House last month, appointing the automaker’s CEO Elon Musk as his point person in a bid to radically alter the U.S. government.
Traded under the NASDAQ ticker TSLA, shares briefly surged following the 2024 presidential election, reaching a nearly $480 peak closing price in mid-December. While the stock settled back a bit over the following months, it has undergone an increasingly sharp rout since Trump returned to the White House on January 20. Shares are now off about $135 since their late-2024 peak and have dipped about 20% since the inauguration. And they were showing no sign of a rebound during late-morning Tuesday trading.
A variety of factors appear to be at work, analysts said, starting with the plunge in demand for Tesla products in a number of key global markets. It hasn’t helped that Musk’s once-stellar reputation has “taken a turn for the worse,” due to his senior role in the Trump administration said Stefan Gengaro, chief analyst with Stifel. But there are other factors at play, including the new administration’s anti-EV stance, as well as Musk’s new, nearly $100-billion bid for OpenAI.
Sales on the slide
The Cybertruck appears to be fast losing sales momentum, Tesla cutting production at its factory in Austin, Texas.
Significantly, Tesla was one of only two major automakers to report a dip in U.S. sales last year – the other being Stellantis. Tesla was off 1.1% globally and, though it doesn’t break out sales by region, Cox Automotive turned to registration data to reveal demand was down around 4% in the U.S.
Separately, the California New Car Dealers Association estimated Tesla’s decline came to 11.6% in the state, the largest EV market in the U.S. While California new vehicle sales, including gas, diesel, hybrid and EV models, were down 0.3% in 2024, the dealer group noted in a statement that, “All of the decrease in the state market last year was attributable to Tesla.”
By comparison, EV sales were up all around the globe. In the U.S., the increase was close to 10%, though that fell well short of the nearly eight-fold increase in demand for battery-electric vehicles between 2019 and 2023.
Considering all the new competition, “it was no surprise Tesla’s market share fell” last year to less than 50% of the U.S. EV market, said Sam Abuelsamid, lead auto analyst with Telemetry Research, but the decline in sales was another matter, he told Headlight.News.
A full plate
SpaceX was hit by the catastrophic explosion of a Starship last month, adding to Musk’s own headaches.
Even before he got involved in politics, Elon Musk was, to some observers, getting distracted. He had to split his time between EVs, solar panels, neuroscience, rocketry and other businesses. Initially, that seemed to fire up his large, once-loyal fan base. But it began to erode with the October 2023 acquisition of Twitter, the social media site quickly renamed X. It didn’t help that Musk opened the door to many extremists, including neo-Nazis, barred by the previous owners.
Musk then took an increasingly obvious turn to the right on his own, many of his stands flying in the face of the traditionally more liberal folks who dominate EV buyer demographics.
Now, Musk is spending much of his time as head of Trump’s newly created Department of Government Efficiency. But it has generated what Washington observers see as more controversy than savings, especially when his small team of hackers and coders accessed Treasury Department financial records covering essentially all American citizens.
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Net favorability ratings
Tesla CEO Elon Musk’s favorability rating has hit a near record low in recent weeks as he has gained power through his ties to Pres. Donald Trump.
With DOGE “making headlines recently regarding its efforts to streamline government agencies,” Gengaro told investors in an advisory that “options of [Tesla’s] CEO Elon Musk have taken a turn for the worse along political affiliations.”
As for Musk himself, his “net favorability rating” has plunged to near all-time lows, according to an analysis Stifel Think Tank Group’s proprietary survey data.
While opinions of Musk – and Tesla – appear to vary significantly depending upon party affiliation, they’re particularly weak among those who have traditionally favored EVs.
Bumper stickers
A bumper sticker caught on a Tesla in Ireland.
That’s reflected in the seeming popularity of the bumper stickers now popping up on Tesla vehicles, one spotted in Ireland proclaiming, “Bought It Before We Knew How Awful He Is.”
Indeed, the growing distaste for Musk – and Tesla is spreading worldwide. Europe’s largest pension fund, Stichting Pensioenfonds ABP sold its entire stake in Tesla during the third quarter of 2024. And Dutch fund ABP cashed out completely last month.
What may be of more serious concern is the fact that Tesla’s sales decline isn’t limited to the U.S. and, if anything, may be accelerating faster in overseas markets such as Europe – where the automaker now operates one of its four Gigaplant assembly complexes. In January, Tesla sales fell 75% in Spain, 63% in France and 59% in Germany, the continent’s largest automotive regional market. On the other side of the globe, sales fell 33% in Australia.
Sell or buy?
Tesla’s plunge over the past month continues – and has wiped out hundreds of billions in market capital.
Despite the past month’s slump, Tesla stock is still up more than 40% from the time of the presidential election. And is in far and away better shape than when it hit a 52-week low of $138.80 last April. But anyone who has kept the NASDAQ ticker open on their screen in recent weeks can be justified in feeling nervous.
The latest dip appears to have at least connection to what could be yet another distraction for Musk, the South African-born entrepreneur making a $97.4 billion bid for control of OpenAI. He co-founded the tech company as a non-profit in 2015 but left after a falling out with partner Sam Altman who, on the Joe Rogan show Tuesday, said it isn’t for sale. “No thank you but we will buy Twitter for $9.74 billion if you want,” he added in a tweet on X.
Musk’s “insecurity” is behind the latest bid and his other moves, said Altman, adding, “I feel for the guy. I don’t think he’s a happy person.”
Some observers fear that the latest bid could add to the financial strain caused by the collapse in value of X, Musk’s purchase requiring a sizable share of his holdings in Tesla be used, effectively, as collateral. It’s unclear if even more could be at risk were the OpenAI bid eventually succeed.
Still, there are plenty of analysts and investors who remain bullish on Tesla stock, even Stifel’s Gengaro, despite all the “headwinds” he sees.
If anything, “Tesla investors should brace for more volatility,” Dow Jones columnist Al Root wrote in a piece on Barrons. But he also noted, “They are used to it.”
Indeed, few major stocks have had more of a roller-coaster ride than Tesla in recent years. And Musk is fond of noting how short-sellers frequently get burned. But never before has Tesla faced as much volatility in its core business, nor has the once-idolized Musk taken such hits to his reputation. And as he continues to spread himself thin the question is whether he – or anyone else – is minding the store to ensure Tesla gets back on track.
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