Is Tesla’s stock declining due to Elon Musk’s support for Donald Trump? Here’s what analysts say

Tesla’s public image is facing increasing scrutiny, with analysts suggesting that CEO Elon Musk’s shifting political profile could negatively impact the company’s sales and stock performance.

According to a recent survey conducted by Stifel and Morning Consult, Tesla’s net favorability rating is approaching its lowest level since tracking began in 2018, as per a report by Forbes.

This downturn in consumer perception has led to a revised price target for Tesla stock, raising concerns about the company's future growth trajectory.

Tesla Stock Target Lowered Amid Public Backlash

Investment research firm Stifel adjusted its Tesla stock price target from $492 to $478, citing concerns over Musk’s influence in President Donald Trump’s administration as a potential factor affecting consumer sentiment.

While maintaining a buy rating, analysts noted that a growing segment of consumers are reconsidering their stance on Tesla due to Musk’s controversial public engagements.

Stephen Gengaro, a senior analyst at Stifel, noted in a report that the negative shift in Musk’s public perception “potentially results in a headwind to sales,” impacting Tesla’s long-term valuation, as mentioned in the Forbes report.

Declining Sales in Key Markets

Tesla’s sales figures have also shown signs of weakness, particularly in European markets.

Recent reports highlighted a sharp drop in sales, including a 12% decline in the UK, a 59% drop in Germany, and a 63% decline in France during January alone.

This trend aligns with concerns that Tesla’s brand image, once synonymous with cutting-edge innovation and sustainability, may be losing ground due to Musk’s polarizing influence.

Tesla Stock Hits Two-Month Low

Following the Stifel report, Tesla stock experienced a 3% decline in early Monday trading before settling at a 0.5% loss by mid-morning.

Despite strong gains in the broader tech sector, Tesla shares slipped to their lowest level since December 4.

Tesla stock has now fallen 11% year-to-date, with shares trading 26% below their all-time high reached in December. This downward trend adds to growing speculation about whether Tesla’s valuation accurately reflects the company’s financial health and business performance.

Elon Musk’s Net Worth Takes a Hit

Musk, the world’s wealthiest individual, has seen a significant decline in his personal fortune. As of Monday, his net worth stood at $396 billion, reflecting a $58 billion drop from its peak of $454.5 billion on December 16.

While Musk remains well ahead of other billionaires, including Meta’s Mark Zuckerberg, the decline highlights the financial consequences of Tesla’s stock struggles.

Tesla’s Performance and Future Prospects

Tesla recorded its first-ever annual decline in vehicle deliveries in 2024, with deliveries dropping from 1.81 million in 2023 to 1.79 million. The company also reported a 20% decrease in profits year-over-year.

Despite these setbacks, Tesla stock remains up over 90% in the past year, largely fueled by investor optimism in the company’s ventures beyond electric vehicles.

Notably, Tesla’s artificial intelligence and self-driving technology efforts continue to attract attention.

Analysts Weigh in on Tesla’s Valuation

Skeptical JPMorgan analysts, led by Ryan Brinkman, recently stated that Tesla stock is “completely divorced from fundamentals”, pointing to its price-to-earnings ratio of 175—nearly seven times the S&P 500 median of 24.

Meanwhile, Stifel remains optimistic about Tesla’s AI capabilities, calling them “critical to the story” of the company’s future.

FAQs

Why did Elon Musk call name his company Tesla?

Its name is a tribute to inventor and electrical engineer Nikola Tesla.

Does Elon Musk still own Tesla?

The largest individual Tesla shareholder is Elon Musk, who owns about 13% of the company's common stock.