Why Shares of Tesla Are Falling This Week and Have Given Back Most of Their Post-Election Rally

Core Insights - Tesla's stock price has seen a significant decline, dropping nearly 15% in one week following a previous surge after President Trump's election victory [1] - The primary factor contributing to this decline is a 45% drop in Tesla sales in January across the European Union and the United Kingdom, despite an overall increase in electric vehicle sales in those regions [2] - Investors are anticipating that Q1 sales will be the lowest since late 2022, indicating potential challenges ahead for the company [2] Group 1 - The decline in Tesla's stock is attributed to a combination of factors, including profit-taking by investors and potential negative impacts from CEO Elon Musk's political actions [3] - An unnamed former senior director of Tesla's Europe, Middle East, and Asia division suggested that political factors are contributing to the brand's decline, alongside a cumulative effect of various issues [3] Group 2 - Tesla's valuation reached a peak of nearly 194 times forward earnings estimates, which is significantly higher than its peers in the "Magnificent Seven," making it vulnerable to pullbacks on minor negative news [4] - The rapid increase in valuation is viewed as unsustainable, leading to skepticism regarding tech and AI valuations in light of upcoming challenges [4]