Tesla's stock slide looks to be unrelenting

Tesla’s (TSLA) stock has known only one direction in February: reverse.

Shares of the Elon Musk-led EV maker dropped another 2% to $321 each in premarket trading on Wednesday, continuing an eye-opening slide from their recent 52-week high.

At its current premarket price, Tesla’s stock is down 33% since hitting a record high on Dec. 18, 2024, weeks after the Election Day win for President Donald Trump — who was heavily backed by Musk.

The stock is the worst-performing member of the closely watched “Magnificent Seven” group of tech megacaps, which includes Meta (META), Amazon (AMZN), Microsoft (MSFT), Nvidia (NVDA), Google parent Alphabet (GOOG, GOOGL), and Apple (AAPL).

Musk’s net worth — which is closely connected to the fortunes of Tesla — has plunged $54 billion year to date, according to Bloomberg data. Musk is still the richest person in the world with a net worth of $378 billion

“The bears are owning the narrative,” Wedbush analyst Dan Ives told me.

And the bears have a lot to feast on regarding Tesla at the moment. For starters, numbers on Tesla sales in important overseas markets have come in soft to kick off the year. The readings have triggered some concerns in Tesla circles that Musk’s close proximity to Trump is damaging its brand.

Tesla sold 63,238 vehicles in China in January, according to data released this week by the China Passenger Car Association. The figure marked a steep 33% drop from December.

At the same time, Australia’s Electric Vehicle Council reported that Tesla’s overall sales fell 33% year over year in January.

“We’re cautious on what’s happening for the EV maker,” Oppenheimer analyst Colin Rusch said on Yahoo Finance’s Market Domination.

Meanwhile, fresh tariffs from the Trump administration stand to raise costs for Tesla and other automakers.

On Monday, the president signed two executive orders imposing additional 25% tariffs on steel and aluminum. Both steel and aluminum are key raw materials used by Tesla.

Trump’s new trade war with China doesn’t help either — a 2023 study by Nikkei found that 40% of the suppliers for materials used in Tesla’s batteries are Chinese companies.

“Changes in government and economic policies, incentives or tariffs may also impact our production, sales, cost structure and the competitive landscape,” Tesla pointed out in its latest 10-K filing.

And last, Tesla’s fourth quarter left a lot to be desired.

The company’s earnings per share missed analyst estimates by a penny. Automotive sales fell 8% year over year alongside price cuts across the Tesla vehicle lineup.

Podcast: How Musk delivers on his biggest promises

“There’s a bit of a disconnect, in our view, between what’s happening fundamentally and what’s happening from a sentiment perspective,” Rusch said.

The Oppenheimer analyst is also concerned that even with the sell-off in the stock, Tesla remains overvalued.

Yahoo Finance data shows Tesla shares are valued at a forward price-to-earnings ratio of 111 times. The forward PE ratio for the S&P 500 is about 22 times. Auto rivals Ford (F) and GM (GM) are valued at PE multiples of 6 times and 4 times, respectively.

Rusch thinks Tesla’s valuation will be “a little bit challenged” in the coming years unless the company can “deliver on a number of promises” it has made to investors such as robotaxis and humanoids.

Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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