Tesla Inc. saw its market capitalization fall below the $1 trillion mark as shares plummeted 8.39% to $302.80, bringing the company’s valuation to $948.81 billion.
What Happened
The electric vehicle maker first reached the trillion-dollar milestone on November 8. However, since then, Tesla has lost significant ground, with shares down 36.0% from their December 17 high of $473.86 and falling 28.59% since January 20.
Factors Contributing to the Decline
Some investors point to CEO Elon Musk’s Washington commitments as a key factor in the decline. Musk has been spending considerable time in the capital, leading to federal worker layoffs and nationwide protests. These protests have directly impacted Tesla’s brand, with demonstrations occurring at showrooms across major U.S. cities, including New York and Seattle.
Impact on Tesla’s Brand and Sales
The backlash against Musk has resulted in vandalism of Tesla vehicles and charging infrastructure. One Supercharger station was recently defaced. Additionally, European Tesla sales plunged 50.4% year-over-year in January, with sharp declines in Germany, France, Spain, and the United Kingdom.
Customer Sentiment Sours
Customer sentiment has also turned against the company. Some former enthusiasts, such as Alain Roy, have sold their vehicles and canceled their orders specifically because of Musk’s political activities. Singer Sheryl Crow has also parted with her Tesla, stating that there comes a time “when you have to decide who you are willing to align with.”
Product Concerns Compound Issues
Product concerns are compounding these issues. Tesla’s upgraded “navigate on city streets” feature in China has disappointed users, falling short of Musk’s self-driving promises. Chinese competitors like BYD and Xiaomi offer similar technologies at lower costs or as standard features.
Analysts’ Views
Despite these challenges, Wedbush Securities analyst Dan Ives maintains a bullish $550 price target on Tesla, arguing that brand concerns are “bark way worse than the bite.” However, Tesla reported its first annual sales decline in 2024, suggesting the company’s post-election market surge has largely evaporated.
Key Statistics
- Market capitalization: $948.81 billion
- Stock price: $302.80 (down 8.39%)
- European sales: down 50.4% year-over-year in January
- Customer sentiment: turned against the company due to Musk’s political activities
Conclusion
Tesla’s market value has plummeted below $1 trillion amid Elon Musk backlash. The company faces significant challenges, including declining sales, product concerns, and negative customer sentiment. While some analysts remain bullish, the company’s future prospects remain uncertain.