Tesla’s stock fell 8% on Tuesday, causing its market value to drop below $1 trillion for the first time since November. This decline came after data revealed a significant drop in the company’s sales in Europe in January.
According to the European Automobile Manufacturers Association, Tesla’s sales in Europe plummeted by 45%, while overall electric vehicle (EV) sales in the region rose by 37%.
This drop in sales highlights the ongoing challenges Tesla faces, following a decline in global deliveries last year. The company is facing increased pressure on CEO Elon Musk to introduce more affordable models and focus on developing autonomous vehicles, which he sees as key to Tesla’s future.
Tesla’s stock fell to $305, reducing the company’s market value to $981 billion, which is still more than twice the combined worth of General Motors, Ford, Volkswagen, Toyota, Hyundai, and BMW.
Some investors are concerned that Elon Musk’s involvement in overseeing significant downsizing of the federal government, at the request of former President Donald Trump, could be diverting his focus from Tesla. Additionally, there are worries that this could harm the company’s brand image with some consumers. Musk is also the head of SpaceX and several other private ventures.
Art Hogan, the chief market strategist at B. Riley Wealth in Boston, commented, “Elon Musk is a very hands-on operator, but if he’s spending so much time in the White House office, how much time is he dedicating to managing his other companies, especially the publicly traded one?”
Concerns over potential over-investment in artificial intelligence are also impacting Tesla, along with Microsoft and Meta Platforms, especially ahead of Nvidia’s quarterly report on Wednesday, according to Hogan.
Tesla’s stock is currently trading at 112 times expected earnings, surpassing its five-year average price-to-earnings (PE) ratio of 93. In contrast, Ford’s stock is valued at just eight times earnings, while General Motors’ stock is priced at seven times earnings.
Tesla supporters highlight the company’s plan to introduce a new, more affordable electric vehicle, as well as Elon Musk’s commitment to launching a paid autonomous car service.
Despite the drop on Tuesday, Tesla’s stock is still up 51% over the past year. However, year-to-date, the stock has declined by 24%.
