Donald Trump recently announced he plans to “buy a brand new Tesla” after the company’s stock dropped over 15%. He attributed the falling shares to “radical left lunatics” trying to harm Elon Musk, the CEO of Tesla. However, stock analysts believe the decline is mainly due to concerns about Tesla’s ability to meet its production goals and a reduction in sales this past year.
Investors are also feeling uneasy about Trump’s economic policies, especially his tariffs. On Monday, US markets fell as fears of a recession grew, following Trump’s comments about the economy being in a “period of transition.” Concerns mounted that these tariffs could increase prices and slow down economic growth by forcing companies to raise prices to cover import costs.
The sell-off particularly affected tech stocks, leading to a significant drop in shares for companies like Nvidia, Meta (formerly Facebook), Amazon, and Alphabet (Google’s parent company). Tesla experienced a notable decline after a UBS analyst warned that this year’s delivery numbers could fall short of expectations.
On Tuesday, Trump took to his social media to rally support for Tesla, urging Republicans and conservatives to back Musk. Surprisingly, his support comes amid his own policies that could limit electric car sales, such as reversing a prior order by President Biden to make half of all car sales electric by 2030 and stopping funding for charging stations.
Moreover, Trump’s tariffs could also affect Tesla directly. In January, Tesla’s CFO noted that tariffs on parts from Canada and Mexico could impact the company’s profits.
Despite the challenges, Trump praised Musk, saying he is doing a “fantastic job” while calling the boycotts a concerted effort to harm him. He reiterated his support, stating, “I’m going to buy a brand new Tesla tomorrow morning.” Following his comments, Tesla shares saw a slight increase of about 5% in pre-market trading.
Currently, Tesla shares are at levels seen before the US election. They had surged after Trump’s victory as investors anticipated benefits for Musk’s business. Recently, Musk has been active in a group informally known as the Department of Government Efficiency, pushing for big cuts in federal funding, and he has voiced support for certain political movements, which has drawn criticism.
Protests have occurred outside Tesla dealerships in various locations, highlighting growing discontent regarding Musk’s political stances. Investment analysts like Linsay James point out that while Musk’s views may impact the brand, the decline in share prices is also tied to hard sales figures. New Tesla orders in Europe and China have dropped significantly, with January sales in Europe down by 45% compared to the previous year.
Concerns over competition from Chinese electric vehicle makers are rising as well. Some experts believe Tesla’s stock has been overvalued and its recent downturn may just be a necessary correction. Investors are increasingly worried about an economic slowdown, which tends to hit high-valued companies like Tesla the hardest. Additionally, questions have arisen about Musk’s focus on his various ventures, including SpaceX and the social media platform X, amidst ongoing challenges like launch failures and service outages.
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