Elon Musk's Tesla stock plunged to its lowest level since May of last year on Monday, Feb. 5, continuing the savage sale of shares that began in 2024. Is the carmaker losing ground relative to other major technological companies?
In a staggering 27% year-to-date loss, Tesla's shares plummeted 6% to $175 before bouncing back somewhat by market close to a 3.7% loss. According to Forbes, Tesla is now the stock with the poorest performance among those in the S&P 500 index.
Heightened Controversy
After missing Wall Street's quarterly profit and revenue projections in 2024, Tesla's stock took a nosedive in the aftermath of earnings. However, the company's current downturn coincides with heightened controversy surrounding Musk, who has called for more authority at Tesla and used his X social media platform to spread far-right rhetoric.
A story in the Wall Street Journal on Saturday, February 3, alleged that Musk and Tesla board members had used illicit drugs together. This comes after Musk had previously said that his drug tests had shown "not even trace quantities" of drugs or alcohol. The allegations have heightened worries about the board's capacity to supervise Musk.
Wedbush analyst Dan Ives told Forbes that the accusations detailed in the Wall Street Journal are the newest shadow hanging over Tesla. Ives largely attributed Monday's price decline to the scandalous article.
Diminishing Profits
As was most obviously shown in Tesla's 65% selloff in 2022, when Musk sold off a large portion of his Tesla assets to finance his acquisition of the social networking platform X, the stock price of Tesla has always been vulnerable to Musk's unpredictable state of mind.
When compared to the other "magnificent seven" tech firms whose prices skyrocketed in 2023, Tesla's 2024 fortunes will be even worse than that. Out of all the companies in the group, only Apple has seen a 2% year-to-date decline in share price, and neither Apple nor Tesla reported sales growth in the double digits for the quarter.
Reportedly, analysts expect a repeat of negative bottom-line growth for Tesla this year after a 23% fall from 2022 to 2023.
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