Islamabad, Feb 26: Tesla’s Market Value Dips Below $1 Trillion Amid Slowing European Sales
Tesla (TSLA.O) faced a sharp 8% drop in stock value on Tuesday, bringing its market capitalization below the $1 trillion mark for the first time since November. This decline follows reports indicating a significant drop in the company’s sales across Europe in January.
According to the European Automobile Manufacturers Association, Tesla’s sales in Europe plummeted by 45%, a stark contrast to the 37% increase in overall electric vehicle (EV) sales within the region. This decline highlights growing challenges for Tesla, especially after a dip in global deliveries last year. The pressure is mounting on CEO Elon Musk to introduce more affordable models and accelerate the rollout of autonomous driving technology, which he views as critical to Tesla’s future success.
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Following the stock drop, Tesla’s share price landed at $305, reducing its market value to $981 billion. Despite the decline, Tesla remains significantly more valuable than automotive giants such as General Motors (GM.N), Ford (F.N), Volkswagen, Toyota (7203.T), Hyundai (005380.KS), and BMW (BMWG.DE) combined.
Investors have also expressed concerns about Musk’s expanding commitments outside Tesla. His involvement in restructuring the federal government under U.S. President Donald Trump has sparked worries that his focus on Tesla may be waning. Additionally, Musk leads SpaceX and several other ventures, raising questions about how much attention he can devote to the electric vehicle manufacturer.
Market analysts, including Art Hogan from B. Riley Wealth, have voiced concerns about Musk’s ability to effectively manage multiple high-stakes enterprises. “If he’s dedicating significant time to government restructuring, how much attention is he giving Tesla, which is publicly traded?” Hogan questioned.
Another factor impacting Tesla’s stock performance is the broader uncertainty surrounding artificial intelligence investments. Companies like Microsoft (MSFT.O) and Meta Platforms (META.O) are also feeling the pressure as investors assess their heavy AI spending ahead of Nvidia’s (NVDA.O) upcoming earnings report.
Tesla’s stock currently trades at 112 times its projected earnings, a significant premium over its five-year average price-to-earnings (PE) ratio of 93. In contrast, Ford and GM are trading at significantly lower PE ratios of eight and seven, respectively.
Despite recent setbacks, Tesla bulls remain optimistic, citing the company’s plans to introduce a more budget-friendly EV and Musk’s vision for an autonomous ride-hailing service. Over the past year, Tesla shares have surged by 51%, although they are down 24% year-to-date.
