Tesla’s Stock Drops Again – Here’s What’s Happening

Dear Reader,

Tesla’s stock is in trouble again, after last week’s 9% plunge, shares fell another 8% on Tuesday, bringing its market cap below $1 trillion for the first time since November. With Tesla now down 25% this year, investors are now asking what’s going wrong?

Here’s what’s driving the latest sell-off:

• European sales disaster: Tesla’s January sales in Europe, the UK, and EFTA markets dropped over 45%, even though overall EV sales grew by more than a third.

• Chinese competitors are gaining ground: BYD and Xiaomi’s latest models include advanced self-driving features for free, while Tesla still charges extra. This is making Tesla less attractive in cost-sensitive markets.

• Disappointing updates in China: Tesla’s long-awaited software upgrade failed to impress Chinese customers, adding more pressure in a market where it’s already losing ground.

• Political backlash: Musk’s involvement in U.S. government downsizing and support for far-right figures in Europe is stirring controversy. Some analysts believe Tesla’s brand perception is suffering as a result.

• Trump’s tariffs could hurt production: New tariffs on Mexico, Canada, and China threaten to raise Tesla’s manufacturing costs, potentially leading to higher car prices and weaker demand.

What’s Next?

Investors are watching Tesla’s upcoming earnings report closely, if sales continue to drop and revenue disappoints, another wave of selling could hit the stock.

At the same time, Tesla faces an identity crisis, is it still the dominant force in EVs, or is it losing ground to newer competitors with better pricing and innovation?

For now, Wall Street is cautious. Tesla’s next move could determine whether it rebounds or falls even further.

Stay tuned,
Street Fin Gazette