Shares of EV maker Tesla (TSLA) are plummeting in today’s trading, which has brought its market value to below $1 trillion for the first time since November. This decline is due to a report from the European Automobile Manufacturers Association that revealed a 45% slump in Tesla’s European sales in January. This is concerning because the overall electric vehicle market in Europe saw a 37% jump in sales during the same period. However, this is just the latest challenge for Tesla.
Indeed, some investors are worried that Musk’s involvement in advising the U.S. government may be distracting him from optimally managing Tesla. As Art Hogan, a chief market strategist at B. Riley Wealth, put it, “Musk is a hands-on operator, and if he’s spending a lot of time in the White House, how much time is he really devoting to running his companies – including the one that’s publicly traded?”
Tesla’s valuation is not helping either, as its stock trades at a whopping 112 times expected earnings. That’s above its five-year average and far higher than the valuations of other automakers. Hogan also noted that concerns about over-investment in artificial intelligence are also weighing on Tesla. Still, Tesla bulls are hopeful that the company’s plans to launch a cheaper electric vehicle and introduce a paid autonomous car service will help turn things around.
Is Tesla a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 13 Buys, 12 Holds, and 10 Sells assigned in the past three months, as indicated by the graphic below. After a 50% rally in its share price over the past year, the average TSLA price target of $351.38 per share implies 17.8% upside potential.
