Tesla has faced a deteriorating outlook over the past two months, and Barclays does not anticipate a turnaround. After lagging for much of last year, Tesla shares gained momentum following Donald Trump’s re-election in November, driven by his close ties with Tesla CEO Elon Musk. From November 5 to Tesla’s record close on December 17, shares skyrocketed by 91%. However, since then, Tesla stock has declined. On Tuesday afternoon, shares closed at $302.80, reflecting a 38% drop. Barclays analyst Dan Levy noted that no single factor explains the downturn. Instead, multiple challenges are contributing to the sell-off, including a reversal of technical factors that fueled the prior rally. “Our best explanation is that there is an unwind of the powerful run that it had last fall post the US elections, which reflected a combination of sharp euphoria and technical factors — with fundamentals largely dismissed,” he stated. Levy also pointed out that Bitcoin’s decline since mid-December has mirrored Tesla’s recent drop, suggesting a broader retreat from speculative assets. Additionally, Tesla’s underperformance aligns with the struggles of other tech giants in the “Magnificent Seven” group, including Microsoft, Amazon, and Meta. Fundamental issues are also weighing on Tesla, as the company missed its fourth-quarter delivery and earnings targets, with weak sales in China. Levy highlighted that Tesla’s previous robust growth narrative has been downplayed, with battery supply challenges emerging. Furthermore, Tesla faces obstacles in launching its self-driving software in China, including data security concerns and domestic competition. Levy remains cautious about Tesla’s short-term prospects, citing limited catalysts and expecting soft first-quarter results. While he is skeptical about Tesla’s ability to improve profit margins, he anticipates the Robotaxi launch in June to be a significant event for the stock. “We could see interest building into the event, with a ‘sell the news’ reaction on the event,” he concluded. — news from CNBC
