Tesla’s stock fell 8% on Tuesday, pushing its market value below $1 trillion for the first time since November after data showed a slump in the electric car maker’s sales in Europe in January.
The European Automobile Manufacturers Association reported a 45% drop in Tesla sales in Europe, compared to a 37% increase in overall electric vehicle sales in the region.
The sales decline highlights Tesla’s challenges following a decrease in global deliveries last year, putting pressure on CEO Elon Musk to introduce lower-priced models and autonomous cars, which he believes are crucial to Tesla’s future.
Tesla shares fell to $305, bringing the company’s market capitalization to $981 billion, still more than twice the combined value of General Motors, Ford Motor, Volkswagen, Toyota Motor, Hyundai Motor, and BMW.
Some investors are concerned that Musk’s involvement in a significant downsizing of the federal government, at the request of U.S. President Donald Trump, may be diverting his attention from Tesla and damaging the company’s brand appeal to certain consumers. Musk also leads privately held space rocket maker SpaceX and other private companies.
“He’s a very involved operator, and if you’re spending that much time in an office at the White House, how much time are you dedicating to managing all of your other companies, including the publicly traded one?” said Art Hogan, chief market strategist at B. Riley Wealth in Boston.
Concerns about potential overinvestment in artificial intelligence are also weighing on Tesla, as well as Microsoft and Meta Platforms ahead of AI chip heavyweight Nvidia’s quarterly report on Wednesday, according to Hogan.
Tesla’s stock is currently trading at 112 times expected earnings, higher than its five-year average PE of 93, as reported by LSEG. In comparison, Ford’s stock is valued at eight times earnings, and GM’s at seven.
Tesla supporters point to the company’s upcoming launch of a new, more affordable electric vehicle and Musk’s promises to introduce a paid autonomous car service.
Despite Tuesday’s decline, Tesla shares are still up 51% over the past 12 months. Year-to-date, the stock has dropped by 24%.
(Reporting by Noel Randewich; Editing by Leslie Adler)