Tesla Inc. is facing significant challenges as its stock price continues to decline, dropping below levels that Commerce Secretary Howard Lutnick recently claimed would never be seen again. On Monday, Tesla shares fell as much as 9.2%, reaching $217.41 by 9:41 a.m. in New York, amid a broader selloff in global equity markets. This decline follows Lutnick’s bullish remarks during a Fox News interview on March 19, when he encouraged viewers to buy Tesla stock, asserting that it would “never be this cheap again.” The day after Lutnick’s comments, CEO Elon Musk urged Tesla employees to hold onto their shares, but the market’s reaction has been anything but favorable.
The latest downturn in Tesla’s stock comes on the heels of a significant downgrade from one of its most ardent supporters, Wedbush Securities analyst Daniel Ives. Ives slashed his price target for Tesla by more than 40%, citing the impact of former President Donald Trump’s trade policies and a brand crisis stemming from Musk’s controversial public persona. Since reaching a record high in mid-December, Tesla shares have plummeted by 55%, reflecting growing investor concerns.
The initial optimism surrounding Tesla’s stock following Trump’s election victory has dissipated, as Musk’s involvement in various political controversies has alienated some consumers and sparked protests against the company. Last week, Tesla reported first-quarter vehicle deliveries that fell short of drastically lowered expectations, marking the lowest delivery figures since 2022. This disappointing performance has led analysts to reassess their forecasts for Tesla’s sales and earnings, with many lowering their estimates even before the company released its weak delivery numbers.
JPMorgan Chase & Co. analyst Ryan Brinkman, known for his bearish stance on Tesla, acknowledged that he may have underestimated the extent of consumer backlash and the “unprecedented brand damage” the company has experienced. The combination of declining sales and negative public perception has raised alarms among investors, prompting a reevaluation of Tesla’s future prospects.
While Tesla is perceived to be somewhat insulated from the 25% tariffs imposed by Trump on imported automobiles, Musk has cautioned that the company will not emerge unscathed. Ives noted that the current tariffs could disrupt Tesla’s operations, supply chain, and global footprint, which have historically provided the company with a competitive edge against rising rivals like BYD.
The situation is further complicated by Tesla’s position in the Chinese market. Ives expressed concern that the backlash from Trump’s tariff policies, coupled with Musk’s association with the former president, could drive Chinese consumers toward domestic brands such as BYD, Nio, and Xpeng. This shift in consumer preference poses a significant threat to Tesla’s market share in one of the world’s largest EV markets.
As Tesla navigates these turbulent waters, the company’s ability to regain investor confidence and stabilize its stock price remains uncertain. The combination of external pressures, including trade policies and brand perception, has created a challenging environment for the electric vehicle manufacturer. With analysts revising their outlooks and consumers increasingly turning to competitors, Tesla faces an uphill battle to reclaim its position as a leader in the EV market.
In conclusion, Tesla’s recent stock decline highlights the volatility of the electric vehicle market and the impact of external factors on investor sentiment. As the company grapples with declining sales and a tarnished brand image, the road ahead may be fraught with challenges. Investors and industry observers will be closely monitoring Tesla’s next moves as it seeks to navigate this complex landscape and restore its standing in the competitive EV market.
