On Tuesday, reports emerged that car sales in Europe had slowed sharply, causing Tesla’s share price to plummet and the electric vehicle maker’s market value to fall below the coveted $1 trillion mark.
Tesla’s share price, led by Elon Musk, closed down 8.4% at $302.80, with a market value of $974 billion. The company’s share price has fallen for four consecutive trading days by 16%, with its market value evaporating by $186 billion during this period.
According to data from the European Automobile Manufacturers’ Association, Tesla’s car sales in Europe dropped by 45% last month, while the sales of electric vehicles across the entire industry soared by 37%. This highlights the growing risks to the company’s core car sales business due to the political adventures of its CEO.
Steve Man, a senior analyst at Bloomberg Intelligence, said: “With sales plummeting in January, Tesla’s European dream is fading.” Meanwhile, “the electric vehicle giant is also facing competition and controversy related to Elon Musk.”
Tesla’s fortunes reversed rapidly. After Donald Trump won the US presidential election at the end of last year, the company’s share price soared, with investors betting that Musk’s close friendship with the president and his team would smooth the regulatory path for the company’s ambition to develop fully self-driving cars.
However, after hitting a record high in mid-December, Tesla’s share price has been on a steady decline, with concerns over slowing sales and Musk’s focus on politics overshadowing the initial excitement.
Tesla’s share price is currently the biggest decliner among large-cap tech stocks, severely dragging down the overall performance of the sector. Early Tuesday, the Bloomberg Big Seven Technology Index fell into a correction, with a market value loss of approximately $1.4 trillion.
This year, Tesla’s stock has performed the worst among large-cap stocks and the third-worst in the Nasdaq 100 index. However, analysts tracking Tesla’s business believe that the decline in Tesla’s stock price may not be large enough. They say that given the deterioration in sales in major markets, the stock of Elon Musk’s automaker is still overvalued.
Chart strategists who analyze trading patterns to predict stock trends are also cautious, even though Tesla’s share price has risen in the past few days. All in all, the outlook for investors betting on another surge in the stock is clearly mixed, much like the weeks following President Donald Trump’s victory.
Mark Newton, the technical strategy director of Fundstrat, said: “I think this stock has not yet bottomed out and may fall again. This could happen in the next one or two weeks.” He believes that the stock could fall back to the level after the US election, that is, around $314, which is about 12% lower than the current level.
