Tesla Shares Drop as Musk Clashes with Washington.
Tesla's stock price has decreased by 30% since reaching a record peak in December.
Tesla's stock has experienced a decline of 30% since reaching an all-time high in December.
While Elon Musk has assumed a significant position in reforming government agencies and influencing Washington, the wealthiest individual in the world has seen a staggering $106 billion reduction in his net worth, primarily due to the sharp decrease in Tesla's share price.
Since its peak in December, Tesla's stock has dropped 30%, with a notable 21% decline occurring since Inauguration Day. This downturn has reduced Musk's net worth from a high of $486 billion on December 17 to approximately $380 billion at present, as reported by Bloomberg.
The stock's decline has created a divide among current and former Tesla investors. Critics of Musk attribute the company's recent struggles to his new political involvement and controversial public image, suggesting that disappointing sales figures in certain markets are a direct result of his engagement with the Trump administration. They argue that for Tesla to prosper, Musk should distance himself from political affairs.
Conversely, supporters contend that Musk's political role is not a significant factor in the stock's decline, pointing out that Tesla's shares are still valued higher than they were on Election Day. They argue that the company is simply navigating the challenges of increased competition in the electric vehicle market while also exploring new initiatives such as self-driving taxis.
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"I don't have a problem if Elon wants to save a bunch of money for America. I say, 'Where's the good part in this for Tesla?'" Ross Gerber, a prominent Tesla investor, told ABC News, referring to cost-cutting efforts undertaken by Musk's Department of Government Efficiency.’
Regardless of differing opinions regarding the impact of Musk's position in government, both current and former shareholders of Tesla have generally recognized the recent challenges faced by the company.
In 2024, Tesla experienced a decrease in car sales compared to the previous year, representing the first decline in year-over-year sales for the company in over ten years, as indicated by earnings reports released in January.
As competitors have begun to challenge Tesla's supremacy in the electric vehicle sector, the company has indicated a potential future revenue source from autonomous taxis, commonly referred to as robotaxis.
In late January, Musk announced that the company plans to initiate its robotaxi testing program in Austin, Texas, in June. However, shortly thereafter, the China-based competitor BYD revealed significant advancements in self-driving technology, which the company claimed would be integrated into models priced as low as $9,600.
Gary Black, managing partner of The Future Fund, which oversees $100 million in assets, including shares of Tesla, stated that the recent decline in Tesla's stock is largely due to investor concerns regarding the company's ability to maintain its leadership in self-driving technology as it did with electric vehicles.
"Over time, you will see Teslas and other cars self-drive. But Tesla is not going to be the only one," Black told ABC News' Elizabeth Schulze.
The stock experienced downward pressure this week following a proposal from a group of investors led by Musk to acquire OpenAI for $97.4 billion. This situation raises the possibility that Musk may divest some of his Tesla shares to fund the acquisition, according to Black.
Black expressed his belief that the decline in stock value is unrelated to Musk's position in government.
"It's always good to know the president of the United States -- to be able to pick up your phone and say, you know, 'I need this favor, that favor,'" Black said.
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The increase in Tesla's stock value following Trump's election victory indicates that numerous investors perceived the association positively. The share price surged approximately 85% within six weeks after Election Day.
However, certain investors attribute the subsequent decline directly to Musk's actions.
Nell Minow, Vice Chair of ValueEdge Advisors and a longstanding critic of Musk, remarked that Musk has been notably "absent" from the company.
"I think that he is a huge drag on the stock right now," Minow told Schulze. "No question, he's a problem."
"Elon Musk is to the Tesla brand what the Green Giant is to corn," Minow said. "He has made himself the brand and that is always very risky."
Minow, who stated that she contributed almost all of her Tesla shares to charitable causes last year, also expressed her disapproval of the Tesla board for what she described as a lack of accountability for Musk, as well as a failure to inform shareholders and the public regarding a leadership strategy while Musk manages DOGE.
"We don't know what the board is thinking. They have not spoken out in any way," Minow said. "They have not made a filing with the SEC about what the impact of this side hustle is, and the employees and the shareholders need some kind of certainty."
New York City Comptroller Brad Lander expressed similar apprehensions regarding the board's capacity to manage Musk effectively. Lander, who is responsible for overseeing $1.25 billion in Tesla shares across the city's five pension systems, indicated that the absence of adequate oversight has been a "long-standing problem."
"Independent governance is designed to provide a voice for shareholders at the table," Lander, who is running for New York City mayor and has publicly sparred with Musk, said in a statement to ABC News. "When companies are controlled by a set of directors with either family or aligned interests, they lose this."
Musk has sought to generate excitement around Tesla's future, stating during a recent earnings call that he envisions the company becoming "the most valuable company in the world."
During this call, Daniel Roska, an analyst from AllianceBernstein Research, inquired about Tesla's strategy to achieve its ambitious goals in light of its elevated valuation.
Musk underscored Tesla's commitment to practical applications of artificial intelligence, asserting that the company is making considerable progress.
RELATED: Jamie Dimon Criticizes US Government Efficiency, Supports Elon Musk's DOGE Initiative.
Tesla’s recent struggles, marked by a significant stock decline and Musk’s controversial political involvement, signal deeper challenges for the company. With a 30% drop in stock value and a rare decrease in car sales, Tesla's future growth appears uncertain, particularly with increasing competition and questions surrounding its leadership. Critics argue Musk’s focus on politics and personal ventures detracts from his commitment to Tesla, potentially harming shareholder confidence.
The lack of clear governance and oversight, along with concerns over Musk's distractions, leaves many wondering if Tesla can maintain its industry dominance and meet its ambitious goals.
