The Trump effect no longer increases Tesla: Stock falls by almost a third since Peak | Finance and business

The close, almost familial relationship between Tesla CEO Elon Musk and the most powerful man in the world is no small substance when it comes to a company’s interests – especially when this man is Donald Trump, who is known to reward loyalty with personal favors And for not considering potential conflicts of interest.

But when the limelight fades and campaign confetti sets, investors turn to the place they can usually find security: the company’s income statement and future expectations. This turns out to be the greatest vulnerability of Tesla, the weakest link in the “magnificent seven” – Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia and Tesla. Now the company is on the verge of leaving the Trillion-Dollar Club.

Tesla has endured two months, which it prefers to forget. Since its peak on December 17, the share price has lost 31.5% of its value, while the S&P 500 and the tech-heavy Nasdaq have been almost flat in the same period. This trend of underprestiation already pushing Tesla into the red in 2025 accelerated after the release of disappointing results at the end of January. Total revenue increased by 2% in the fourth quarter, but it was only a little positive thanks to its energy storage and generational business, while the revenue from its vehicles fell by 8%, a fall that the company attributed to price cuts on its Model 3, Model Y, Model S and Model X Cars.

It is difficult to find any improved measurements. Over the past three months, earnings before interest and taxes (EBIT) amounted to $ 1.58 billion, well below the $ 2.7 billion consensus estimate and the net margin was 6.2%, which fell below the expected 9.9%. The result for 2024 fell 53%and fell to $ 7.09 billion. This has led to a sharp downward adjustment of expectations. The surplus forecast for 2025, based on the analysts’ consensus prepared by Bloomberg, has been reduced by 30%, from the $ 14.73 billion that was predicted 12 months ago to the current estimate of $ 10.24 billion. Revenue expectations are also reduced by 14%, from $ 132.8 billion to the $ 113.47 billion now expected of the market.

The recalculation comes as Tesla deals with multiples far higher than its direct competitors. The share is appreciated at 120 times projected 2025 earnings compared to nine times for Toyota, six times for Ford and four times for Volkswagen. Tesla’s market value of just over $ 1 trillion is three times that of these three rivals combined. This indicates that the market still believes that Tesla’s growth potential is much larger. However, this demanding valuation-more typically leaves for a start-up than a veteran company-TESLA vulnerable to sharp falls if it does not meet forecasts or faces unforeseen challenges.

The results were far from spectacular – in fact, on the contrary – but they were enough to maintain stock market rally thanks to Musk’s promises of a more prosperous future. He painted a vision of an “epic” 2026 and “ridiculously good” 2027 and 2028, in his own words. A new business business will play a key role in this optimistic view. Musk announced that Tesla starts in June will start testing a paid service for its autonomous cars in Austin, Texas, where there are no rules that prevent it. By the end of the year, the service will expand to many regions throughout the United States with plans for nationwide operations by 2026.

While investors are waiting to see the return on Tesla’s latest gamble, they have been focused on other troubled data. Tesla’s sales in Europe got a significant hit in January with a fall of 59% in Germany, 63% in France, 75% in Spain, 44% in Sweden and 38% in Norway. What is particularly about is that these drops occurred in a market that is growing together, which means that Tesla is losing the market share. In Germany, where Tesla has its only European factory, its market share has dropped from 14% to only 4%.

The reasons behind this fall remain unclear. Some analysts suggest that the launch of the new model Y, expected in the first half of the year could be a factor. According to this theory, many customers may delay their purchase in anticipation of the new model rather than choosing from the current lineup. However, it is difficult to believe that this is the only explanation. Others point to the reputation of damage that Tesla suffer from the Musk’s rising political activism that has thrown a shadow over the company’s public image.

Musk’s support for Trump has propelled him to the head of the Department of Government Efficiency (DOGE), which is tasked with cutting federal expenses as much as possible. However, as expected, the South African -born Tycoon has not limited itself to simply doing this work quietly. His political commitment has grown significantly week by week. The turning point followed his endorsement of the right-wing Department of the German election on February 23, which included an interview with the party’s leader.

This rising political activism, now extending beyond US borders, has transformed the Tesla leader into a polarizing figure. Musk still has a significant consequence, but setback against him is intensified. On social media, this is reflected in the mass migration of users from the musk-owned X to Bluesky. In the automotive industry, the impact could manifest in customers who choose rival brands instead.

In The Green since Trump’s victory

Despite the recent poor performance, Tesla’s share price is still more than 30% compared to its value before Trump’s election victory. This is positive news for those who invested earlier, but less for those who jumped on the tape truck recently as the “Trump effect” could continue to empty if the autonomous car department does not meet expectations.

The automotive industry is not immune to the effects of Trump’s trade policy, which has already imposed duty on aluminum, steel and China. For example, Tesla’s sales in China fell by 11.5% in January compared to the previous year. In the Asian market, Tesla also faces an intense competition from BYD, which, unlike Tesla, moves with the power and saw a 47.5% increase in sales during the first month of the year, including both hybrids and electric vehicles.

According to an analysis by Rico Luman, an ing economist that specializes in transport, Trump’s tariffs could have a “huge” influence on the automotive industry. “The United States sells far more new vehicles than it produces, and auto supply chains are among the most internationally integrated. Therefore, import taxes will quickly lead to higher costs and the pressure on prices. “

However, Musk doesn’t seem very worried. Despite running a company like Tesla-I moment the eighth largest in the world at market value brakes Musk is not. In addition to his new role as government adviser under Trump and his obligations across his various ventures (including Xai, X.com, Neuralink, SpaceX and Boring Company), Musk is now pursuing an offer of almost $ 100 billion to acquire Openai, the owner of Chatgpt, from his longtime rival, Sam Altman.

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