Tesla Shares Face Largest Weekly Decline Due to Weak Sales and Competition
Tesla Inc. shares are set for their worst weekly decline since the U.S. election, dropping 7.5% amid weak global sales and competition from Chinese automaker BYD Co. Analysts cite Elon Musk’s political affiliations and recent sales figures in Europe and China as key contributing factors to the stock’s decline. Wall Street analysts are split on their outlook for Tesla, with an average price target of $360 for the next 12 months.
Tesla Inc. shares are on track for their worst weekly decline since the U.S. presidential election, with a notable drop of 7.5% as of Thursday’s close. The downturn has been attributed to disappointing sales figures worldwide, particularly in Germany, France, and the UK, where sales have plummeted to their lowest levels since 2021. Compounding these issues, there has been an 11.5% year-over-year decrease in deliveries from China, a crucial market for Tesla. In contrast, Chinese rival BYD Co. has experienced a remarkable surge in share price, signaling a shift in investor sentiment.
Tesla’s stock has fallen approximately 22% from its record closing high on December 17 and reflects concerns over Elon Musk’s political associations. The weak sales in Europe coincide with Musk’s support for a far-right German party and his public disputes with UK leadership, leading some analysts to believe that these controversies may negatively influence Tesla’s market performance. Analysts argue that Musk’s relationship with former President Trump may impact investor perception and company valuations.
Despite these challenges, there is hope among some investors that Musk’s ties to political figures could eventually facilitate regulatory support for Tesla’s ambitions, particularly in the realm of self-driving technology. However, current market trends show Tesla as the most significant underperformer among major tech stocks tracked by the Bloomberg Magnificent Seven Index, maintaining a lofty valuation that is three times higher than its peers.
Market experts suggest that there may still be further declines for Tesla, with some recommending waiting before investing. According to technical strategist Mark Newton, despite potential for a rebound within a few weeks, Tesla remains within a short-term downtrend and is closely monitored for patterns indicating a shift. Investors may have opportunities to purchase shares at a lower price, particularly if the stock approaches the anticipated mark of $350.
Opinions on Tesla remain divided among Wall Street analysts, with an even split between those recommending a buy and those suggesting to hold or sell. The average 12-month price target is around $360, indicating continued caution amid the current volatility in Tesla’s stock performance.
Tesla’s stock has been under significant pressure recently, experiencing its largest weekly drop since the U.S. presidential election. Key factors influencing this decline include lackluster sales reports across multiple international markets, particularly in Europe and China, where Tesla’s performances have faltered against rising competition. Additionally, Musk’s political affiliations have stirred debate among investors about their potential impact on business operations and perception within the market.
Tesla shares are facing a challenging market period characterized by declining sales and investor uncertainty driven by Elon Musk’s political connections. The stock is the weakest performer among major technology firms, highlighting investor hesitancy amid a potential continued downturn. Analysts remain divided on future prospects for Tesla, underscoring the need for cautious evaluation of market conditions before making investment decisions.
Original Source: financialpost.com
