Are car maker Tesla’s shares in a bull market or a bear market? Oddly, you can make a case for both. Shares are in official bear market territory, having lost a third of their value since December’s peak.
Then again, the stock is up some 35 per cent since November’s US election, which looks pretty bullish. A trillion-dollar stock swinging around like this is evidence the efficient markets theory should be taken with a pinch of salt.
Still, crazy market behaviour cannot persist indefinitely, and the recent correction is a welcome reminder that fundamentals do matter. Tesla’s latest earnings were awful, and analysts rightly warn that Elon Musk is playing a risky game.
Sales in Europe have collapsed, with Musk’s political shenanigans making Tesla’s brand a toxic one to many. US brokerage Stifel says its latest consumer survey indicates Tesla’s favourability rating is “nearing all-time lows”.
That’s echoed by analysts Oppenheimer, which politely cautions that Musk’s political activity “risks alienating consumers and employees as the Trump administration tests the limits of its power”.
Oppenheimer says Musk’s $97.4 billion (€93 billion) bid for ChatGPT creator OpenAI is “a distraction from Tesla’s challenges”, but distractions are all Musk appears interested in right now.
Shares slipped following reports Musk plans on spending the next four months working at the US Department of Government Efficiency (DOGE) in his effort to slash that county’s government spending.
For all the market’s swings, one thing remains constant: a distracted CEO rarely bodes well for a struggling company.
