Tesla Sags as Musk Lollygags

Editor’s Note: Warm weather and sunny days have finally returned to my corner of North Carolina. The past winter was unusually cool and wet here, so I didn’t get outside as much as I normally do.

But now, I can leave my house without a winter jacket constricting my every movement. In other words, it’s time to start playing golf again!

Like most golfers, I’m not as good as I think I should be. Perhaps that is the allure of the game; just when I think I’ve figured it out, a couple of snowmen on the scorecard remind me that winter is only a hosel rocket away!

Post Election Bump

Speaking of hosel rockets (a golf term for shanking the ball), the stock market has been sending some wayward shots into the gallery these days. With so much uncertainty regarding how the Trump administration will implement its political agenda, Wall Street is on edge.

Consider electric vehicle manufacturer Tesla (NSDQ: TSLA), which I wrote about three months ago after Donald Trump secured his second term in the White House on November 5. At that time, TSLA was soaring as Elon Musk emerged as one of Trump’s top advisors.

In just three weeks, TSLA jumped from below $214 to above $346. Less than two weeks later, it reached an all-time high over $488. At that point, it had doubled in value in just two months!

I See England, I See France

Since then, Tesla has been stuck in reverse. This week, it fell below $300 after the company reported less than 10,000 of its automobiles were sold in Europe last month.

The 9,945 Telsa vehicles newly registered in Europe in January were nearly half the 18,161 cars registered a year earlier. To make matters worse for Tesla, EV sales in Europe rose more than 37 percent over that span.

Apologists for the company suggest that European car buyers are waiting for a retooled version of the Tesla Model Y to hit the market before buying a new vehicle for the company. That may be so in some cases, but a more likely explanation is that Musk’s foray into politics is starting to influence consumer purchasing decisions.

A Difficult Question for the Board

Tesla’s plight raises a difficult question for the company’s board of directors, who are tasked with a legal obligation to act in the best interests of all Tesla shareholders. Do they remain silent while Musk exerts political influence that may do substantial harm to the company’s financial performance?

There is no easy answer to that question. On the one hand, Musk is Tesla’s single largest shareholder, controlling roughly 13 percent of its common stock. On the other hand, that means 87 percent of the company is owned by other shareholders.

At one time, Tesla was by far the most dominant player in the EV market. That is no longer the case. According to Statista, Tesla’s market share for plug-in electric vehicles was a little over 10 percent last year compared to 80 percent in 2019.

Boycotts and DOGE

I doubt that Tesla’s board of directors will do anything to silence Musk. They serve at his leisure and can be replaced if they displease him.

However, Musk cannot do anything to prevent boycotts in Europe and the United States that are cutting into sales. Certainly, there are many potential EV buyers in this country that have been adversely affected by the personnel actions taken against federal government workers by Musk’s Department of Government Efficiency (DOGE). My guess is that they, and their families and friends, aren't very happy with Musk these days.

To be clear, I am not opining here about the efficacy, legality, or morality of those actions. Certainly, those elements of DOGE are getting plenty of coverage by the mainstream media.

Out of Favor

However, I am concerned about the impact Musk’s political actions may have on Tesla’s financial performance. Two years ago, I added Tesla to the Personal Finance Growth Portfolio when it was trading near $123.

Even after its recent decline, I have still more than doubled my money on TSLA. That’s because my timing was particularly good. Tesla shareholders that bought the stock one year before me are now showing a loss.

Those are the shareholders that Tesla’s board must also consider as Musk frolics in the Oval Office with his young son sitting on his shoulders. And right now, he isn't doing them any favors.