Tesla Stock Erases Gains After Trump’s Victory
Tesla shares have had a disappointing performance this year, dropping 28% and wiping out nearly all gains since President Donald Trump’s election victory on November 5.
That day, Tesla closed at $251.44 before soaring to a record-high closing price of $479.86 on December 17. Since then, however, the stock has plunged 39%, bringing Tesla’s market capitalization below the $1 trillion mark.
Tesla’s Ties to the Trump Administration
Tesla’s initial stock surge was partly fueled by Elon Musk’s close relationship with the Trump administration. In addition to serving as Tesla’s CEO, Musk was appointed the nominal leader of the Government Efficiency Initiative (DOGE), an entity created by President Trump. This connection was seen as beneficial, potentially easing regulatory hurdles for Tesla’s autonomous driving technology.
Factors Behind the Decline
Several key factors have contributed to Tesla’s recent stock slump:
- Disappointing Financial Results: Fourth-quarter earnings and vehicle deliveries fell short of expectations, with annual deliveries declining for the first time in Tesla’s history.
- Regulatory Scrutiny: In January, the NHTSA launched an investigation into one of Tesla’s autonomous driving features, adding to ongoing probes related to self-driving technology.
- Cybertruck Challenges: The highly polarizing Cybertruck has faced production delays and concerns over demand.
Volatility and Future Prospects
While Tesla’s stock has historically been volatile, with short-term drops of up to 30%, a series of recent events appears to be weighing on the company’s shares following their post-election surge. However, Tesla investors still have reasons for optimism.
The company recently launched an updated version of its best-selling Model Y and is expected to unveil a more affordable EV in the first half of the year. Additionally, Tesla plans to begin paid trials of fully autonomous robotaxis in Austin, Texas, this June.
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