What Happened?
Shares of electric vehicle pioneer Tesla (NASDAQ:TSLA) fell 6.7% in the afternoon session after markets remained concerned about the company's sales performance, as recent data highlighted significant weaknesses in Europe and China. These worries were further amplified by increasing competition in these regions, which could weaken the company's market position. Notably, Reuters reported that Tesla is offering a free trial of its Full Self Driving (FSD) autonomous software to consumers in China. This move revealed the company's willingness to use incentives to attract customers and counter rising competition.
Adding to investor concerns, analysts were increasingly worried that CEO Elon Musk's political activities might be contributing to the stock's recent decline. With Tesla's shares having lost most of their post-election (November 2024) gains, Wall Street appeared to be questioning Musk's ability to juggle his responsibilities at Tesla and his other ventures, especially given the added political commitments linked to the Trump administration.
Mizuho analyst Vijay Rakesh summed it up well. He sees Tesla's troubles coming from multiple angles, including "...a deterioration in geopolitics including, brand perception (US/EU), share loss due to stronger competition (China), and softer-than-expected demand for the Model Y refresh."
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Tesla? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Tesla’s shares are extremely volatile and have had 119 moves greater than 2.5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 8.8% on the news that President Trump said he would be buying a Tesla vehicle, which could be interpreted as a show of support for CEO Elon Musk, who had played an active role in the administration's Department of Government Efficiency.
Musk followed up by saying Tesla planned to double its production output in the United States within two years.
Separately, markets experienced a boost after data from the Bureau of Labor Statistics revealed that inflation for the month of February 2025 came in better than expected. The CPI rose 0.2% from the previous month (vs estimates for a 0.3% increase), while headline inflation rose 2.8% year on year (vs estimates for a 2.9% y/y increase).
The data revealed inflation continued to edge closer to the Fed's 2% target, but not quite there yet. The reaction wasn't anything wild, but the sentiment leaned positive. The Nasdaq led the way, climbing 1.4%, boosting some tech stocks.
Tesla is down 37.4% since the beginning of the year, and at $237.41 per share, it is trading 50.5% below its 52-week high of $479.86 from December 2024. Investors who bought $1,000 worth of Tesla’s shares 5 years ago would now be looking at an investment worth $8,276.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.