NEWS UPDATE:As Wall Street is turning its back on Elon Musk…….Read more

 

Liberals and government employees aren’t the only people angry with Elon Musk. Tesla’s plunging share price means many investors are angry, too.

Shares of Tesla shot up 91% after election day, peaking just before Christmas, as investors anticipated Musk and his car company would be big winners as a result of Donald Trump’s second term as president. Musk was Trump’s largest financial supporter during the campaign, and has since become the highest-profile member of his administration, by far. In his role as the head of the Department of Government Efficiency (or DOGE), he has been trying to impose deep cuts in spending that had been previously approved by Congress, laying off thousands of federal workers.

But shares tumbled 5.6% in trading Thursday and are now down 45% from their December peak, giving up 96% of that post-election bump. Just since Trump took office and Musk began wielding power they have lost 38% of their overall value.

The drop in share price probably reflects the concern that Musk has been much a more visible – and polarizing – figure in the Trump administration than he was expected to be immediately after the election. Many investors likely figured Musk would be a more traditional “behind the scenes” kind of adviser, not necessarily taking an active role in enacting controversial policies. Musk had enough other business interests, running companies ranging from Tesla to SpaceX to Neuralink to X, to keep him occupied.

But the drop in Tesla’s value is also a sign of the headwinds the company is facing, in addition to increased competition from other automakers, especially those from China, who have made significant gains in their home market and in Europe as well.

Whether it’s one problem or a myriad of problems causing the slump, however, it is clear now that Tesla’s sales woes are dragging the stock price down, too. And it’s not clear what, if anything, could lift Tesla sales going forward.

Global sales are ‘imploding’

While electric vehicle sales in Europe shot up 34% overall in January, sales of Teslas plummeted 50%. Tesla’s sales fell 29% in China, the company’s second largest market after the United States, over the course of the first two months of the year, according to Reuters.

And Tesla’s US sales suffered a 16% drop in US sales between December and January, according to an estimate from Cox Automotive. It’s difficult to directly attribute the drops to any one cause, however, as a drop in that period is typical for the company, which usually makes a major push for year-end sales to hit its full-year financial results target, followed by a drop in January. Sales in January 2024, for instance, were off 24% from its December 2023 sales.

Globally his sales are imploding,” said Gordon Johnson, an analyst who is mostly critical of Tesla and its shares. “The sales drop in China is about competition but in western nations, people are pissed at him. Whether that’s driving down the sales in western countries, or it’s competition doesn’t matter. There’s little he can do reverse it. And we know he’s not going to have full self-driving. I think this could be the year the Tesla’s shares finally collapse.”

Even even some bullish investors already think Musk is going to wildly miss the mark when it comes to Tesla’s growth this year.

“I think investors are coming to a new expectation around what deliveries are going to look like for the year,” said Gene Munster, managing partner at Deepwater Asset Management. “Three or four months ago, Musk guided to 20% to 30% delivery growth in 2025. And then a month ago he didn’t make any mention of the previous target, which analysts and investors correctly assumed that that meant that target is no longer on the table.”

A polarizing figure

The question is how much of the plunge is a reaction to Musk’s political profile. Munster, who still considers himself a Tesla bull, said he believes about three-quarters is blowback.

“At the time of the election, it was unclear how visible Musk would be (in the Trump administration),” Munster said. “Some believed the whole DOGE thing wouldn’t get off the ground. At this point Tesla investors are seeing Musk as having more authority than Trump. There’s some brand damage that comes from that.”

There were protests outside Tesla stores throughout the country Saturday, with scattered reports of vandalized Teslas. One person was arrested in Loveland, Colorado and faces federal criminal charges after prior acts of vandalism against a Tesla store, and possession of “incendiary devices.”