Sharp Drop in Tesla Shares Erases Gains Since U.S. Elections

Tesla Shares Drop by 15% Due to Delivery Forecast Cut and Economic Concerns

Significant Drop in Tesla Shares

Tesla’s shares dropped by more than 15% on Monday, erasing all gains since the U.S. presidential elections in November. The sharp decline followed a reduction in the company’s delivery forecast by an analyst, which added further pressure on the stock price.

Tesla shares closed at $222.15, down 15.42%, the lowest level since October. However, the stock rebounded slightly on Tuesday, rising by 1.8% to $226.14 in pre-market trading.

Factors Contributing to Tesla’s Decline

Several key factors contributed to the drop in Tesla’s stock:

1. Analysts’ Reduced Delivery Forecast: Analyst Joseph Spak from UBS lowered his first-quarter delivery forecast to 367,000 vehicles, down from 437,000. He also cut his 2025 delivery forecast to 1.7 million vehicles, well below Wall Street’s expectations of around 2 million units.
2. General Economic Concerns: Broader economic worries also affected Tesla, with key indices like the Nasdaq and Dow Jones falling by 4% and 2.1%, respectively. Concerns about a potential global recession and a slowdown in the U.S. economy increased investor anxiety.
3. Elon Musk’s Political Stances: CEO Elon Musk’s recent political statements sparked negative reactions among some customers, leading to protests at Tesla showrooms and damage to some vehicles.
4. Fears about Global Economy: Investor concerns about the health of the global economy, fueled by President Donald Trump’s erratic trade policies, further pressured Tesla’s stock price.

Tesla’s Market Valuation Challenges

Despite the recent drop, Tesla still holds a high market valuation compared to traditional car manufacturers. In mid-December, Tesla’s market value reached over $1.5 trillion, with shares trading around $480. However, by Monday, the stock price had fallen to $222, reducing Tesla’s market value to around $715 billion.

Elon Musk’s Impact on Tesla’s Stock

Tesla’s shares soared following Donald Trump’s victory in the 2016 presidential elections. By mid-December, the stock price had doubled compared to its value on election day. However, the price has steadily declined since then, with the pace of the drop accelerating in recent weeks, partly due to Elon Musk’s political ties and investor concerns over future growth.

First Annual Decline in Deliveries for Tesla in Over a Decade

Tesla ended 2024 with its first decline in vehicle deliveries in over a decade, despite Musk’s earlier predictions of growth. However, Musk kept investor interest with promises of future projects in self-driving cars and human-like robots, although the success of these projects remains uncertain.

Conclusion: Will Tesla Recover?

The current drop in Tesla’s shares reflects increasing pressure on the company due to lowered expectations, general economic concerns, and Musk’s controversial political stances. Investors are closely watching to see whether Tesla can overcome these challenges in the coming months and if it can regain momentum in the future.

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Sources:

• Joseph Spak from UBS regarding delivery forecasts.
• Key market reports from Nasdaq and Dow Jones.
• News related to Elon Musk’s political statements and their impact on Tesla’s image.