Momentum investors should appreciate the post-election rise in shares of Tesla (TSLA). After the President’s inauguration, Tesla CEO Elon Musk led the Department of Government Efficiency. DOGE is not an agency. It is an advisory group that suggests such actions as staff cuts and reduced spending.
Unfortunately, Trump’s tariffs are one of the reasons that Tesla is struggling. Without tax credits and related subsidies, Tesla sales will worsen in the U.S.
Polarizing coverage of Elon Musk and his political affiliation is hurting Tesla’s brand. His association with the party divides consumers. At least half of the potential buyers will avoid Tesla EVs in response. They may buy a Polestar (PSNY), Rivian (RIVN) truck EV, or Vinfast (VFS) vehicle instead.
In Europe, Tesla sales dropped by 70% Y/Y. Europeans may buy a Chinese EV if the price is low enough. Volkswagen (VWAGY) introduced an inexpensive EUR 20,000 EV called ID.EVERY1. It will launch this model in 2027.
Traders may characterize the TSLA stock drop of 38.1% YTD as a rare opportunity. Still, the P/E is 91 times (forward). Markets assigned a premium on the stock on expectations that Tesla will lead in cyber cabs, artificial intelligence, and robotics. Tesla has a history of overpromising on affordable pricing, delivery dates, and features. The self-driving (“FSD”), for example, is still not ready yet.
TSLA stock is a good trade. It could go either direction next. Whichever way it goes, the volatility will reward traders the most.
