Tesla Stock Declines Over 8%, Continues Downward Trend Amid Concerns

Tesla shares dropped over 8% on Monday, marking a decline that has persisted for seven weeks. The stock has lost more than half its value since a December peak, with pressures from disappointing sales and concerns regarding management involvement in government. Analysts remain split on the stock’s outlook, with UBS lowering its price target significantly.

On Monday, Tesla shares experienced a significant decline of over 8%, placing the electric vehicle manufacturer among the leading decliners on the S&P 500 list. This descent marks a continuation of a larger trend, as the stock has decreased for seven consecutive weeks, erasing all gains made post-election and falling below its pre-election levels.

Since achieving a peak close of $479.86 on December 17, Tesla’s stock has now lost more than half of its value. Factors contributing to this plunge include disappointing fourth-quarter delivery results, uncertainty surrounding tariffs introduced under the Trump administration, as well as declining vehicle registrations in both China and Europe at the start of 2023.

Investor sentiment surrounding CEO Elon Musk’s involvement with the Trump administration has led to mixed reactions, with some analysts concerned about potential damage to Tesla’s brand. Protests against the company’s dealerships have also emerged in recent weeks, heightening these concerns.

Market analysts exhibit a divided outlook on Tesla’s stock, as reported by Visible Alpha. Among the 19 brokers, there are 10 ‘buy’ ratings, five ‘hold’ ratings, and four ‘sell’ ratings. UBS analysts have reiterated a ‘sell’ stance and decreased their price target for the stock from $259 to $225. They revised first-quarter delivery estimates down from 437,000 to 367,000, expressing skepticism about the demand for the new Model Y vehicle, although they anticipate upcoming models may enhance sales.

In summary, Tesla’s stock is facing substantial challenges as illustrated by its recent 8% decline and the loss of half its value since December 17. Concerns regarding CEO Elon Musk’s role in government, declining sales in key international markets, and mixed investor sentiment have created a bearish outlook. While analysts remain divided, with some expecting future sales from new models, uncertainty persists.

Original Source: www.investopedia.com