Elon Musk, once the golden boy of the tech world, is now watching as Tesla’s stock unravels spectacularly. The electric vehicle giant’s shares have plummeted back to levels not seen since before Donald Trump’s election victory, wiping out what was once an astonishing 91% gain. Investors who once cheered Musk’s close ties to the president are now facing a rude awakening – Tesla’s market freefall appears to be just getting started.
Tesla stock has been falling for weeks, but on Monday, it nosedived 15% to $222 per share, its lowest point since October 23, just before Trump’s election. This is its biggest decline in a single day since September 2020. The Nasdaq Composite, a stock market index made up mostly of technology companies, has been suffering from broader market jitters in the wake of Trump’s latest trade policies, but Tesla’s plunge is uniquely tied to Musk’s own actions. His political manoeuvring and embrace of Trump’s economic policies have sent the company into a tailspin, both in terms of reputation and market performance.
The ‘Trump Bump’ becomes the ‘Trump Slump’
For a brief period, it seemed Musk’s strategic alliance with Trump would pay off handsomely. Tesla’s stock soared in December on the hope that a Trump administration would be friendly to business interests, particularly those of high-profile supporters like Musk. That optimism is now dead and buried.
Reality has struck hard, with investors realising that Tesla is one of the biggest casualties of Trump’s protectionist policies. The president’s tariffs, particularly on Chinese imports, have severely hurt Tesla’s supply chain, making it more expensive to manufacture vehicles. Not only that but China, Tesla’s second-largest market, is showing little patience for Musk’s political antics. Sales in the country dropped 11% in January alone, while China’s homegrown rival, BYD, saw a 48% surge. Meanwhile, Tesla’s European sales collapsed by 45% in the same period. Even California – Tesla’s original stronghold – has seen a 12% decline in sales. The numbers don’t lie: Musk’s political choices are hurting his bottom line.
A billionaire’s wealth vanishes
Musk’s net worth has taken a staggering hit along with Tesla’s stock. Once valued at an eye-watering $464 billion, Musk’s fortune has shrunk by $141.5 billion. Monday alone saw him lose $20 billion in paper wealth as Tesla’s stock tanked. Of course, he remains the world’s richest man, but that’s likely of little comfort as investors lose faith in him as an asset rather than a liability.
Adding to the misery, UBS analyst Joseph Spak downgraded Tesla’s stock price target to $225 from $259, further fuelling the bearish sentiment. Spak now predicts that Tesla’s 2025 vehicle deliveries will shrink by 5%, marking the second consecutive year of negative growth – an unthinkable trajectory for a company that once seemed destined to dominate the EV market.
Musk’s divided attention is costing Tesla
Musk’s penchant for distractions isn’t helping either. Instead of focusing on Tesla’s business, he has spread himself thin across multiple ventures, including SpaceX, Neuralink, and most recently, his new role in Trump’s administration as head of the Department of Government Efficiency (DOGE). Investors are rightly concerned that Tesla is no longer his primary priority, and the company’s floundering sales and missed profit targets only reinforce that fear.
According to the website Share Talk, Jacob Falkencrone of Saxo Bank summed up the growing investor unease: “Elon Musk’s political controversies are becoming a liability. Tesla’s brand favourability is at an all-time low, and his polarising views are alienating core customers, particularly in environmentally conscious markets.” In other words, Musk is no longer the maverick genius disrupting industries – he’s now seen as an erratic billionaire who has overplayed his hand.
A fall from grace
What makes this decline all the more delicious for Musk’s critics is the sheer speed at which the empire is crumbling. From its record high of $479.86 in December, Tesla’s stock has erased all of its post-election gains and then some. Its market capitalisation has collapsed by nearly $800 billion, and Musk’s own stake in the company is now worth $55 billion less than before Trump’s victory.
The downfall of Tesla is shaping up to be a cautionary tale of hubris, overconfidence and the dangers of mixing politics with business. For years, Musk cultivated a cult-like following, presenting himself as the tech visionary who could do no wrong. But now, the mask is slipping. Investors are no longer willing to overlook his erratic behaviour, and customers are increasingly rejecting Tesla in favour of more stable and less politically divisive alternatives.
In the end, Musk’s bet on Trump may be his most catastrophic miscalculation yet. The stock market has made one thing abundantly clear: Tesla is no longer the unstoppable force it once was. And as the losses mount, the schadenfreude is palpable.
