Tesla shares continued their weeks-long dive on Friday. Elon Musk's electric car maker has wiped out the $700 billion in profits accumulated since the US presidential election.
Tesla shares fell 4.6% before recovering slightly in the afternoon session on Friday morning.
Tesla stocks fell more than 28% last month. Since January 1st, inventory has fallen by nearly 32%.
Following Donald Trump's overwhelming victory on November 5th, Tesla became one of the top performers in the market, supported by expectations that CEO Musk and his close relationship with the president would benefit the electric car maker.
However, these initial hopes are hidden by raising concerns about the company's core business: the sales of cars.
This latest dip follows a series of setbacks that rattle investor trust.
A report from January revealed Tesla Quarterly sales fell for the first time in 10 years Recent data shows that automakers have lost their advantage in major markets such as Europe and China.
Additionally, some investors fear that Musk's increased political involvement is diverting his focus from leading the company.
“The bets on Tesla stocks, which are rising due to Musk's political involvement, have not been successful so far,” said Adam Sarhan, founder of 50 Park Investments. He told Bloomberg News.
“Initially, investors who were expecting a big profit from Musk's political involvement are too excited, and now their cool minds are winning.”
Tesla's struggle is exacerbated by a challenging macroeconomic environment.
Speculative enthusiasm that urged stocks to be high after the election declined amid concerns about US trade policy and economic growth.
The S&P 500 has dropped by more than 7% from its peak, but the Nasdaq 100 has entered the corrections area.
In addition to Tesla's plight, Bank of America analyst John Murphy downgraded its stock price target on Tuesday, cutting it from $490 to $380.
Murphy cited concerns over slower sales of new cars, lack of updates on affordable vehicles and uncertainty surrounding Tesla's Robotaxi initiative.
That said, Tesla's recent recession could bring inventory into what technical analysts call the “overselling” zone, setting the stage for short-term rebounds.
Possible catalysts for recovery include improving sales numbers, company updates on its Robotaki efforts, or a broader revival of investors' appetites for high-risk stocks.
Still, potential gatherings must contest lingering concerns about Tesla's assessment.
The company's forward price-to-earning ratio remains rising at 88, significantly higher than the S&P 500's multiple 21.
“Tesla's futures price-to-earning ratio (a metric that compares our current stock price with future earnings per share) is still very close to 90,” Matt Maley, chief market strategist at Miller Tabak + Co., told Bloomberg News.
“So the stocks are still very expensive.”
As Tesla navigates an increasingly uncertain landscape, investors are considering whether recent sales represent opportunities for buying or whether they represent warning signs of deeper challenges ahead.
