Stock prices of Tesla fluctuate post delivery shortfall; Musk speculated to depart from DOGE cryptocurrency
Revamped Article:
Tesla's stock took a 5.2% dive on April 2nd as the company announced a three-year low in electric car sales. However, it bounced back, gaining 4.9% later in the session. This rebound followed a report from Politico suggesting Elon Musk, Tesla's CEO, might take a step back from his government activities soon.
Tesla sold 336,681 vehicles during the first quarter of 2025, a near-9% decrease compared to the same period last year. Sales haven't been this lackluster since Q2 2022, marked by global market turmoil due to the Russian invasion of Ukraine.
These dismal sales figures come after a less-than-satisfactory fourth quarter, where Tesla failed to meet analysts' forecasts, leading to a 6.1% stock drop on January 2nd. Interestingly, Tesla remains a favored stock among retail investors on the interactive investor platform.
However, Tesla's share price has been negatively affected by the infamous Magnificent Seven selloff, causing the S&P 500 to drop 4.6% in the first quarter, with Tesla shares falling about 30% year-to-date.
The market downturn can be linked to a backlash against Musk, whose increasingly political stance appears to have affected Tesla's car sales. Matt Britzman, senior equity analyst at Hargreaves Lansdown, stated, "Tesla's first-quarter delivery numbers are a disappointment. A decline from last year is expected, but the magnitude is worse than many anticipated."
Might Elon Musk Abandon Government Duties?
According to Politico's report, citing three anonymous White House insiders, President Donald Trump has decided to relieve Musk of his role at the Department of Government Efficiency (DOGE). Insiders claim some White House officials view Musk as a political liability, although Trump continues to appreciate Musk's work at DOGE. Musk is expected to leave DOGE around May or June as his time as a special government employee comes to an end. However, sources also indicate that Musk will remain an influential figure in the White House post-DOGE.
What Ails Tesla's Sales?
Numerous factors hamper Tesla's sales growth:
- Intensifying competition, particularly in China, where the world's largest EV market is dominated by local players such as BYD, squeezing Tesla.
- BYD's sales increased 23% year-on-year in March, while battery electric vehicle sales climbed 39%.
- BYD's cheaper pricing has applied downward pressure on Tesla's model prices over the years.
- The political firestorm surrounding Musk and Tesla has led to a boycott of Tesla products in the US, affecting sales.
- Europeans, concerned about the Trump administration's disregard for European security, have been tightening their wallets on luxury items like Teslas.
This double whammy of business and political challenges has the potential to jeopardize Tesla's growth.
Should You Invest in Tesla Shares Despite the Slump?
Despite the recent stock price plunge, Britzman believes Tesla stock remains the priciest of the Magnificent Seven based on past and projected earnings. As of April 1st, Tesla traded at nearly 100 times forward earnings and over 125 times trailing earnings.
This valuation resting on the assumption that Tesla will be the biggest winner from the eventual adoption of self-driving cars. The long-term outlook will depend on whether it turns out to be true, but for now, Tesla shares will likely remain volatile due to the strong political overtones surrounding the company.
In conclusion, a weak Q1 for Tesla electric car sales can be attributed to a mix of market saturation, increased competition, and political pressure affecting brand perception. As Elon Musk continues in his role, Tesla bulls will be keeping a close eye on any movements surrounding his government duties. In the meantime, Tesla shares will continue to show volatility in response to both company performance and political shifts in the White House.
- Amidst the political backlash against Elon Musk and Tesla, investors ponder whether to invest in Tesla shares, given the potential impact on the company's performance and brand perception.
- With Tesla's sales being impacted by increasing competition, cheaper pricing from rivals, and a boycott in the US due to political concerns, the Finance sector observes the resilience of the business in the face of these challenges.
- As Tesla prepares for self-driving cars to revolutionize the Technology industry, investors in the General-News world carefully analyze the company's valuation in relation to its past and projected earnings, considering the volatile nature of the shares due to political overtones.
