Why Tesla Stock Experienced Its Second-Worst Month Ever: Insights for Nervous Investors Amid Elon Musk’s Leadership Changes

Tesla’s stock had a tough time recently. Although shares bounced back with a 4% increase, they still faced a significant drop of 28% in February. This comes as investors grow worried over consumer spending trends, tariffs, and changing policies. The situation is further complicated by the fact that Tesla’s market value has dropped below $1 trillion.

February set a record for Tesla, marking its worst month ever with a decline of 28%. The previous record was 37% in December 2022. Analysts suggest that the problem lies in Tesla’s high valuation. “Determining a safe point for this stock is challenging,” says Steve Sosnick, a strategist at Interactive Brokers. He believes that the stock’s value is more influenced by investor emotions than by typical valuation metrics.

This week alone, shares dropped by 13%. A report from the European Automobile Manufacturers’ Association revealed a striking 45% drop in Tesla’s EU sales in January, even as the electric vehicle market overall saw growth. Adding to the pain, Tesla’s earnings report last month fell short of expectations.

Elon Musk’s recent political activities might also be affecting potential buyers. He has taken a more vocal stance in political matters, which some analysts believe could alienate certain consumer groups. Musk has made headlines by endorsing the far-right Alternative for Germany party and participating in campaigns supporting controversial figures like Tommy Robinson in the UK.

Despite these challenges, there seems to be some level of support for the stock. Bob Lang, founder of Explosive Options, believes there is still a “floor” for Tesla shares, even if it’s tough to pin down exactly where it is. “Many investors remain loyal because they’ve made substantial profits,” he explains. This loyalty could keep investors holding onto their shares, regardless of the stock’s recent performance.

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