Tesla Shares Plunge Amid Backlash Over Musk's Political Stance
Tesla's stock fell over 15% amid increasing backlash against CEO Elon Musk's political activities and declining sales in key markets.
Overview
Tesla faces mounting backlash as CEO Elon Musk's political affiliations intensify investor concerns, leading to a 15.4% stock drop, marking the steepest decline since 2020. Musk's $270 million in support for Trump's 2024 campaign, as well as his leadership role in the controversial Department of Government Efficiency, has worried potential buyers, particularly in California where sales are plummeting. Analysts predict a 5% drop in deliveries for 2024 and report protests against the company. Despite this turmoil, Musk remains optimistic about long-term prospects, claiming the company will recover from the loss of over 50% in market value.
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Analysis
- Tesla's growing political controversy surrounding Elon Musk could negatively impact sales and brand perception, with vandalism and protests reported against the company. Reports show that Tesla stock has recently taken its largest single-day decline since 2020, reflecting investors' dwindling confidence amid political distractions.
- Analysts express concern that high profit estimates for Tesla may be unrealistic given recent production shifts and the potential impact of Musk's political affiliations on consumer demand. Notably, UBS has cut its forecasts for Tesla deliveries as market dynamics shift and consumer sentiment becomes more negative.
- There is an observable trend of former Tesla owners opting to sell or trade their vehicles in protest of Musk's actions, reflecting a broader sentiment among consumers toward the brand, which has seen significant declines in sales across major markets like California and Europe.
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CNBC·4M·FAQ
Elon Musk's support for Donald Trump's 2024 campaign, including a $270 million donation, and his role in the Department of Government Efficiency have contributed to the backlash. Additionally, his public appearances and gestures have alienated some of Tesla's traditional customer base.
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