Tesla stock decline took center stage on Wednesday as shares dropped 5.6%, marking the end of the EV giant’s impressive rebound. Over the past five sessions, Tesla’s stock had soared by more than 27%, its best streak of that length since a major rally following Trump’s 2016 election victory.
Before last week’s rally, Tesla shares had plummeted over 50% from their record high in December, with much of the decline occurring in February and early March. Despite rising global demand for electric vehicles, Tesla has struggled in key regions like Europe, where sales have faltered. The company has also faced acts of vandalism at dealerships, allegedly linked to CEO Elon Musk’s political influence. Additionally, some of Tesla’s strongest supporters have expressed concern over Musk’s growing list of corporate and government responsibilities.
Tesla Stock Decline Sparks Mixed Reactions from Analysts
Interestingly, Tesla’s stock price often appears disconnected from the company’s actual EV business performance. This was evident on Wednesday when analysts at William Blair reduced their full-year vehicle sales forecast by over 10% while still maintaining an “outperform” rating for the stock.
“Despite short-term setbacks in the auto sector, we remain optimistic about the faster-than-expected expansion of the Megapack business and the upcoming launch of ride-sharing services,” the analysts wrote.
Megapack, Tesla’s large-scale energy storage solution, has been a bright spot for the company. Analysts argue that Tesla’s stock often moves based on momentum, and the latest sharp pullback could set the stage for another rally. “Investor expectations are at a low point, and as they adjust, we anticipate shares will stabilize and regain momentum,” they added.
Tesla Stock Decline and the Push to Restore Confidence
Musk and his supporters have been working to restore confidence in Tesla’s stock this month. Two weeks ago, former President Trump took to Truth Social to announce his intention to purchase a Tesla as a sign of support for Musk. Shortly after, he hosted a press conference on the White House South Lawn, where he inspected five Tesla models and praised Musk’s contributions.
Further boosting investor sentiment, Commerce Secretary Howard Lutnick appeared on television last Wednesday, urging Americans to consider buying Tesla stock.
“This stock is unbelievably undervalued. It won’t stay this cheap for long,” Lutnick stated in an interview with Fox News.
A day later, Musk reassured employees in an all-hands meeting, encouraging them to hold onto their Tesla shares.
Tesla’s latest rally began when the Federal Reserve updated its economic outlook, signaling two potential interest rate cuts this year. Stocks received another boost when reports emerged that the Trump administration may scale back planned tariffs set to take effect on April 2.
Retail investors, eager to seize the opportunity, have been buying Tesla shares at record levels, showing strong confidence in the company’s future despite its recent volatility.
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Source:www.investopedia.com
