Tesla shares experienced a significant decline on Wednesday, marking their largest drop since before Trump's election victory. Despite the recent downturn, the stock remains elevated by 75% since the election, reaching a record high earlier this month. Analysts at Barclays expressed surprise at the magnitude of the rally and noted investor confusion regarding the stock's disconnect from fundamental factors.
Tesla shares dropped more than 8% on Wednesday, their biggest decline since before Trump's election victory. The stock is still up 75% in the six weeks since the election and climbed to a record on Dec. 11, surpassing its prior high reached in 2021. 'Most investors we speak to have been stunned by the magnitude of the rally,' analysts at Barclays wrote in a note on Wednesday. Tesla closed at $440.13, and is still up 75% since Election Day on Nov. 5.
Last week, the stock climbed to a record, surpassing its prior high reached in 2021. Ahead of Wednesday's drop, it had continued going up, notching a closing high of $479.86 on Tuesday. 'Most investors we speak to have been stunned by the magnitude of the rally, and are increasingly confused on how to handle the stock given how widely disconnected it appears to be from fundamentals,' analysts at Barclays wrote in a report on Wednesday. They have the equivalent of a hold rating on the stock and a $270 price target.in the broader market, including a 3.6% plunge in the Nasdaq, the second-worst day of the year for the tech-heavy index. Tesla is coming off a 38% rally in November, its best monthly performance since January 2023 and its 10th best on record. CEO Elon Musk, a major Trump backer, poured in $277 million primarily into his campaign effort, according to Federal Election Commission filings. Now Musk, the world's richest person, is set to lead the Trump administration's 'Department of Government Efficiency,' which is expected to function as an advisory office, alongside onetime Republican presidential candidate Vivek Ramaswamy. His new role could give Musk, who also runs SpaceX and owns social media company X, influence over federal agencies' budgets, staffing and the ability to push for the elimination of inconvenient regulations. Musk said during a Tesla earnings call in October that he intended to use his sway with Trump to establish a 'federal approval process for autonomous vehicles'
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