Elon Musk's electric car maker Tesla has seen its market value fall by 49 percent in just a few months. JPMorgan analysts say they have found no comparable event in the history of the automotive industry. Such an event is "unprecedented."
The analysts wrote that they cannot find any precedent in the history of the automotive industry where a brand has lost so much market value in such a short period of time. They also noted that the closest comparable examples may be the events of 2012 and 2017, when sales of Japanese and Korean cars fell sharply due to diplomatic tensions with China. Source: Business Insider
However, those events were limited to a specific market. But Tesla's sales decline in 2025 is not limited to any specific country or region.
In a report published on Wednesday, JPMorgan analysts cut their price target for Tesla shares by 41 percent to $230.58 from $135. They also forecast Tesla's first-quarter 2025 deliveries at 355,000 units, down 8 percent from the first quarter of 2024.
According to analysts, there are two main reasons behind Tesla's dramatic decline - a decline in global sales and branding issues caused by the company's CEO Elon Musk's involvement in politics.
It was once thought that Musk's support for Donald Trump would benefit Tesla. Tesla was the only electric carmaker whose stock price rose after Trump's victory in the November election. It was thought that Musk's close relationship with the Trump administration could benefit Tesla from government spending cuts. But now that idea is changing. New analysis suggests that Musk's work with the Trump administration may actually have a negative impact on Tesla's market demand.
JP Morgan analysts wrote that Musk's work at the Department of Government Efficiency has created controversy in the country. Politically, the right is pleased with it, while the left is angry. However, in the end, this controversy is hurting Tesla's sales.
Tesla's market capitalization has fallen by about 49 percent from December to last Wednesday. While the company's market value was $1.54 trillion at the end of 2024, it has now fallen to $777 billion. That is, Tesla's market value has fallen by $763 billion in about three months.
In the past few weeks, protests have taken place in front of Tesla showrooms in various cities in the United States; there have also been incidents of vandalism in several places. Trump has said in Tesla's favor in this incident that he will consider declaring the culprits 'domestic terrorists'. Not only brand image, some analysts have also expressed concerns about Musk's political involvement. According to them, Musk is unable to focus on managing Tesla due to political activities. JP Morgan analysts also said that Musk bought Twitter (now X) at a time when both the price and sales of Tesla's cars were on the decline.
Morgan Stanley analysts wrote in a report on Monday that the main reasons for the decline in Tesla's shares are the slow pace of sales, a brand image crisis and a lack of confidence in the market. However, they still consider Tesla's shares a potential investment. No comment was received from Tesla on this matter. Although the share price has fallen by half, Tesla is still the world's most valuable car company. After Tesla, Toyota is followed. Their market value is $ 292 billion.
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