Tesla Faces Worst Weekly Performance Since 2020 Amid Sales Decline
Tesla shares have dropped 7.5% this week, facing their worst performance since 2020, primarily due to plunging sales in key global markets. The drop is exacerbated by Elon Musk’s political connections, which some analysts believe may negatively affect consumer perception and sales. Market sentiment is mixed, with analysts split on recommendations for the stock’s future amidst ongoing volatility in valuation.
Tesla Inc. is experiencing a significant downturn, with its shares plunging by 7.5% this week, marking its worst weekly performance since the 2020 presidential election. This decline is attributed to disappointing sales figures across key markets, including a substantial drop in Germany, France, and the UK. Additionally, deliveries in China fell by 11.5% year over year, while rival BYD Co. experienced a surge in its stock after releasing updates to its smart-driving technology.
The drop in Tesla’s share price—now down 22% from a peak on December 17—has raised concerns among investors, especially as it coincides with Tesla’s CEO Elon Musk’s controversial political affiliations, including support for a far-right political party in Germany. These political actions have led analysts to suggest that they may have adversely affected Tesla’s sales in Europe, which has seen losses in its three largest markets.
Mike O’Rourke, chief market strategist at Jonestrading, has posited that Tesla could be suffering due to Musk’s close association with former President Donald Trump. This relationship, while possibly beneficial for regulatory negotiations, has concurrently been criticized and could be contributing to the company’s stock struggles.
As it stands, Tesla is the laggard among significant tech stocks, yet it maintains the highest valuation relative to its peers in the Bloomberg Magnificent Seven Index. Analysts are divided on the stock’s outlook; with opinions split evenly between those recommending buying, holding, or selling. The average price target for Tesla shares is approximately $360, suggesting a cautious market sentiment regarding near-term recovery.
Mark Newton from Fundstrat forecasts that Tesla shares may hit a low point before potentially rebounding in the next few weeks. He indicates that there may soon be an opportunity for investors to acquire shares at a more favorable price, advising that a continued decline could present an attractive risk/reward scenario if purchased at $350, down from Thursday’s close of approximately $374.
Tesla’s current difficulties in the stock market arise from disappointing sales performance across several major international markets, primarily in Europe and China. After a record high in December 2022 following Trump’s election victory, the stock has faced significant challenges, largely influenced by not only market competition but also Musk’s political affiliations which appear to impact consumer sentiment. As the company navigates a rapidly evolving automotive landscape and increasing scrutiny on the EV market from changing administration policies, its valuation and market position face ongoing uncertainty.
In summary, Tesla’s stock is facing serious challenges with a notable decline linked to poor sales performance and potential market penalties stemming from Elon Musk’s political activities. Analysts express mixed opinions regarding the stock’s future, suggesting both caution and opportunities for investment should prices further decline. Observers are urged to watch market trends closely in the coming weeks before making investment decisions.
Original Source: financialpost.com
