Stock market today: S&P 500 rides Apple-led tech rally to close higher
Investing.com -- Live by the sword… die by the sword.
Shares of Tesla (NASDAQ:TSLA) saw a meteoric rise following the 2024 Presidential election due in part to CEO Elon Musk’s close relationship with President Donald Trump. Now, that same relationship is hurting the stock.
From election day through Christmas, Tesla’s stock surged an impressive 84%. However, since that time, the stock has been down 40%.
The stock closed at $251.44 on election day, before results were announced, and now trades at around $290 – just 15% higher – wiping out massive gains.
Many believe that Musk’s push with the Department of Government Efficiency (DOGE) is turning off some buyers, particularly overseas buyers.
Earlier this week, European data showed that Tesla’s new car registrations in the European Union, the European Free Trade Association, and the UK slid 45.2% year-on-year to 9,945 registrations.
Musk’s increased political visibility is “alienating buyers,” Gene Munster of Deepwater Asset Management said following the data.
Amid waning demand, Munster thinks 2025 delivery expectations for Tesla could be way too high. Wall Street expects 2 million Tesla vehicle deliveries in 2025, but according to Munster, the whisper number is around 1.7 million.
Munster doesn’t think the stock will bottom until Wall Street analysts lower their delivery numbers closer to the whisper number.
In addition to sagging demand for Tesla cars, investors are worried about Musk’s time spent away from his car company.
“The worry of the Street is that Musk dedicating so much time (even more than we expected) to DOGE takes away from his time at Tesla in such a crucial moment and year for the company,” Wedbush analyst Dan Ives said.
However, while Ives highlights the worries, he also thinks the bears have it wrong.
“The bears will now focus on this DOGE issue, isolated protests, brand worries as their latest narrative, but the reality is this does not change the future of Tesla,” Ives said.
Ives highlights that Tesla is preparing for a mass-market launch in early 2025, with key advances in autonomous driving and the Optimus project across its global network. An unsupervised FSD rollout in Austin is set for June, accompanied by additional EV and battery growth catalysts. The upcoming Model Y Juniper launch in the US and China is expected to spur demand, and a lower-cost vehicle is anticipated before July to boost global deliveries. All in, Ives sees Telsa’s stock recovering the recent losses and jumping further to $550 per share, or 90% higher versus current levels.
Musk, for his part, is telling Tesla investors to take the long-term approach with the stock. In response to the worries that Musk is making the stock go down, he said Friday on X, "The long-term outcome for Tesla is very high."