Shares of Tesla, which had previously surged after Donald J. Trump’s election win, took an 8 percent hit on Tuesday. This decline erased most of the gains made due to investors’ belief in Tesla’s potential benefits from Elon Musk’s support of the Trump campaign. Concerns were raised over Musk’s focus on politics and signs of alienating potential buyers, as well as a significant drop in European sales.
The stock closed at $302.80, the lowest since Nov. 7, representing a 37 percent decline from its peak in December. Some investors, such as Gary Black, expressed disappointment in Tesla’s recent performance and lackluster sales of the Cybertruck. Despite this, Black’s firm still held Tesla shares and expected a recovery to $380 in the near future.
Wall Street analysts viewed the drop in Tesla shares as a return to pre-election levels, indicating a potential decline in vehicle sales for the year. The European sales data suggested Tesla may not achieve the growth forecasted by the company. The impact of Musk’s political activities on Tesla’s brand loyalty remained a concern in the market, especially in Europe where competition is increasing.
While there is no concrete evidence of a weakening brand in the U.S., European market dynamics may be shifting in favor of competitors. Tesla’s market value falling below $1 trillion could affect Musk’s status as the richest person in the world, given the majority of his wealth is tied to Tesla stock. The company faces challenges in halting the erosion of its market share while contending with political and sales-related issues.
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