Elon Musk-owned Tesla’s shares dipped 8 per cent on Tuesday, pushing the EV maker’s valuation below $1 trillion for the first time since November 2024. This comes after the company reported a dip in its car sales in Europe in January.
Tesla’s shares fell to $305/share with its market capitalisation hitting $981 billion. This is, notably, still over twice the combined value of General Motors, Ford Motor, Volkswagen, Toyota Motor, Hyundai Motor and BMW, Reuters reported.
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According to European Automobile Manufacturers Association, Tesla sales dropped 45 per cent in Europe despite a 37 per cent rise in overall EV sales across the continent.
The company had recorded a dip in global sales last year, putting pressure on it to come out with lower-priced models and its flagship full self-driving feature.
Some investors at Tesla are worried that Musk’s work in slashing US government’s spending, a task assigned to him by President Donald Trump, is distracting him from his duties at Tesla. They are worried that this is also damaging Tesla’s brand appeal to some customers. Some investors
“He’s a very hands-on operator, and if you’re spending that much time in an office in the White House, how much time are you spending running all of your other companies, including the one that’s publicly traded?” Art Hogan, chief market strategist at B. Riley Wealth in Boston, told Reuters. Concerns about potential over-investment in artificial intelligence are also weighing on Tesla, Hogan added.
Tesla’s stock recently traded at 112 times expected earnings, above its five-year average PE of 93, according to LSEG. By comparison, Ford’s stock is valued at eight times earnings, and GM’s is at seven.
Tesla bulls point to the company’s plan to launch a new, cheaper electric vehicle and to Musk’s promises to launch a paid autonomous car service.
With Tuesday’s drop, Tesla shares remain up 51 per cent over the past 12 months. Year-to-date, the stock is down 24 per cent.
