- Tesla, down more than 50% from highs, no longer seems to be part of the so-called Musk trade.
- The stock fallen in each of the seven weeks since Musk first went to Washington.
- Tesla’s post-election gains have been erased as firms like xAI and SpaceX continue to thrive.
Elon Musk’s influence on the creation of wealth has long been undeniable. This has showed up recently in the form of the Musk trade, which has boosted the appeal of assets closely linked to the mega-billionaire.
But Tesla, Musk’s flagship car company, no longer appears to be part of that success story.
The EV-maker’s stock is now down more than 50% from recent highs, and its entire post-election boost has been erased. Shares have declined in each of the past seven weeks since Musk first went to Washington, DC to help with government cost cuts.
Monday saw one of the company’s worst-ever slides, with the stock dropping 15%, its biggest loss since September 2020.
It’s now clear that while the Musk trade at least initially succeeded in boosting sentiment — and valuations — across crypto and companies, Tesla is dealing with a unique array of problems currently holding it back.
The company’s EV-sales business, for one, has been struggling. Car sales plummeted in several countries last month, with Tesla purchases down more than 40% year-over-year in Norway, Denmark, and Sweden. In China, a key market for Tesla, sales fell 49% on a yearly basis, while in Germany, they were down 76%.
Wall Street is also juggling some concerns about Tesla’s full self-driving software, and the competition the company faces in the autonomous vehicle space. For instance, BYD, Tesla’s China-based rival, saw its sales soar 90% year-over-year in China in February.
Musk’s action-packed presence in Washington, meanwhile, hasn’t been helping, with some investors viewing the billionaire’s politics as a distraction from his duties at Tesla.
“We think shareholders have legitimate concerns about Elon Musk being spread too thin and it’s become clear he’s now spending more time on DOGE than anything else,” Garrett Nelson, senior equity analyst at CFRA Research, told BI last week.
Other parts of the Musk trade have hardly seen the same degree of skepticism, if any.
February in particular proved a fruitful month for two of his private entities. After sitting on it since 2022, the social-media platform X was able to offload nearly $5 billion of the debt used by Musk to finance his purchase of the company. xAI also entered talks to raise $10 billion at a $75 billion valuation, Bloomberg reported.
The valuation of SpaceX, meanwhile, has shown no signs of slowing. The company sold shares in December at a $350 billion valuation, up from a prior $210 billion valuation.