The Tesla stock price has imploded this year, erasing most of the gains made in 2024. TSLA crashed to a low of $220 on Monday, its lowest level since October last year, and down by over 55% from its highest level this year. This crash has pushed its market cap from over $1.57 trillion earlier this year to $660 billion today.
The ongoing TSLA share price collapse has also affected Elon Musk, the founder and biggest shareholder. According to Bloomberg, Musk’s net worth has plunged by over $132 billion this year to $301 billion.
Donald Trump to the rescue?
The ongoing Tesla stock crash has attracted the attention of Donald Trump. In a Truth Social post, he blamed the ongoing challenges at Tesla to the “Radical Left Lunatics” who are aiming to punish Musk for his work at the Department of Government Efficiency (DOGE). He added that he would buy a brand new Tesla vehicle on Tuesday as a sign of confidence:
“I’m going to buy a brand new Tesla tomorrow morning as a show of confidence and support for Elon Musk, a truly great American. Why should he be punished for putting his tremendous skills to work to help MAKE AMERICA GREAT AGAIN?”
Tesla has become a collateral damage to Donald Trump’s presidency as many liberals have continued to avoid the vehicles.
Further, some Canadian politicians, including Chrystia Freeland, have advocated for charging a 100% tariff on Tesla. The argument is that such a tariff will make Teslas unaffordable in Canada, hurting Musk personally.
Read more: Tesla stock price forecast: 4 reasons TSLA is imploding
There are also signs that Musk’s close relationship with Trump is affecting its sales in Europe. Recent data shows that Tesla sales in Europe have plunged by over 40%, a trend that may continue in the coming months.
China may also decide to target Tesla as its trade war with the US gains steam. It can do that by excluding Tesla vehicles from the subsidies that it offers other local EV companies like Li Auto, Xpeng, and BYD.
TSLA’s fundamentals and valuation
The ongoing Tesla stock plunge is because of its fairly weak fundamentals. At its peak earlier this year, Tesla had a market cap of over $1.56 trillion.
For a company richly valued like that, you would expect its revenue and profitability growth to be surging.
Tesla is not doing that as its growth trajectory has faded. Its annual revenue in 2024 rose to $97.6 million, slightly up from the $96.7 million it made a year earlier. Analysts anticipate that Tesla’s sales will be $111 billion this year, which may be too ambitious.
Tesla deserved a premium valuation during its peak as it was largely the only game in town. Today, many other EV companies are having spectacular growth. In China, BYD has taken a substantial market share. Other companies like Li Auto, XPeng, and Nio are all gaining market share.
Tesla is pegging its hope on its robotaxi business. While this is a huge market, it will likely take time for the company to be highly profitable in it.
Tesla stock price analysis
The weekly chart shows that the TSLA share price peaked at $488.55 in January and has now imploded to $222.15. It has retreated below the key support level at $297.97, the highest swing in July 2023.
The stock has also tumbled below the major S/R level of the Murrey Math Lines, a sign that bears are in control. All oscillators like the Relative Strength Index (RSI) and the MACD have all pointed downwards.
Therefore, the Tesla stock price will likely keep falling despite Donald Trump coming to the rescue. Such a move will see it drop to the next support at $101.18, its lowest point in 2022.
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