On Monday, Tesla Inc.’s stock dropped once more as worries about a decline in sales are fueled by a shift in the public’s perception of CEO Elon Musk.
Additionally, there is growing concern that the Trump administration’s ambiguity around subsidies for EVs and EV chargers may also lower demand in the US. International demand for Tesla automobiles has already suffered.
During a five-day losing streak, Tesla’s stock (TSLA) dropped 3% and has now lost 8.6%.
Last week, the stock experienced its worst weekly performance since early October, falling 10.6%. It has dropped almost 25% since closing at a record $479.86 on December 17, even though it has still increased 43% during the presidential election, when Musk was a major financial and campaign-trail supporter of Donald Trump.
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Although he has reduced his price objective for Tesla’s shares from $492 to $474 and his 2025 revenue prediction by 5% to $116.8 billion, Stifel analyst Stephen Gengaro remains bullish on the company’s stock.
Musk’s political involvement, which has begun to significantly affect how customers perceive Tesla’s EVs, is a major factor in his pessimistic outlook.
“With the so-called Department of Government Efficiency, or DOGE, “making news recently over its efforts to simplify government agencies, options of [Tesla’s] CEO Elon Musk have taken a turn for the worse along political connections,” Gengaro wrote in a letter to clients.
According to Gengaro, sales may be hampered by Tesla’s “net favorability rating,” which was determined using exclusive survey data from the Stifel Think Tank Group.
According to him, the net favorability rating dropped from 9% in January 2024 to 3% for the week of January 27. He pointed out that the rating was 33% in January 2018.
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The trailing four-week average for net purchase consideration for the week ending January 27 has also fallen, approaching new lows, but has been typically drifting lower in recent years, according to Gengaro, who also highlighted this loss in favorability.
Sales in Europe have already been impacted by Musk’s political activity and the resulting decline in his reputation, and it looks like this is also the case in China. Tesla reported lower-than-expected revenue and profit per share in its fourth-quarter results release, along with a disappointing outlook.
According to Gengaro, he is also worried about the potential impact on sales of Trump’s proposals, which are aimed at eliminating financial incentives for EV purchases and expanding the network of EV charging stations.
A $5 billion scheme to install fast chargers on highways was “abruptly halted” by the Trump administration, he noted. However, Gengaro admitted that it is “hard to gauge,” given the National Electric Vehicle Infrastructure’s low budget allocations thus far, how Trump’s directive will affect EV chargers.
Gengaro is still optimistic about Tesla’s stock, though, since his revised goal still suggests a 32% increase from the present price.
The record-low prices of products sold that Tesla announced for its fourth quarter, a cheaper car that will go on sale in the first half of 2025, a “Full Self-Driving” feature that is anticipated to be unveiled this year, and the acceleration of Optimus robot production are among the advantages, in his opinion.
Over the last 12 months, Tesla’s stock has risen 86%, compared to a 20.5% increase for the S&P 500 index SPX.
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