What Happened?
Shares of electric vehicle pioneer Tesla (NASDAQ:TSLA) fell 4.9% in the afternoon session as momentum slowed after a 40% rally that followed the Q1 2025 selloff, suggesting that the recent surge may have exhausted short-term buying interest.
It is also possible some investors were taking profits amid uncertainty as they wait for more concrete updates on Tesla's highly anticipated product updates scheduled for later this year. These updates are critical for improving Tesla's growth story, as reported sales in Europe and China were weak in the first quarter of the year.
Contributing to the pullback, a widely circulated Bloomberg report resurfaced concerns about the safety of Tesla's driver-assistance technology, highlighting a fatal 2023 crash. The timing of the story is especially sensitive, as Tesla prepares to unveil its AI-powered robo-taxi service in Austin later in the month, a launch that risked being overshadowed by renewed scrutiny and could shake investor confidence in the company's autonomous driving ambitions.
Adding to the wall of worry is Elon Musk increasingly looking like an enemy to President Trump rather than a confidant. President Trump has shown the willingness to punish companies that do not fall in line with his agenda and vision.
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What The Market Is Telling Us
Tesla’s shares are extremely volatile and have had 131 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 9 days ago when the stock gained 5.2% after the major indices (Nasdaq +2.0%, S&P 500 +1.5%) rebounded as President Trump postponed the planned 50 % tariff on European Union imports, shifting the start date to July 9, 2025.
Companies with substantial business ties to Europe likely had some relief as the delay reduced near-term cost pressures and preserved cross-border demand.
The update should be beneficial for Tesla, as data from the European Automobile Manufacturers' Association revealed the company sold 7,261 cars in Europe in April, down 49% year on year.
So, the delay could help the company avoid being caught in the crossfire of retaliatory tariffs and potential complications from escalating trade tensions between the US and the EU.
Contributing to the stock's momentum, CEO Elon Musk noted in a social media post on X (formerly Twitter) that he would be allocating more of his time to the company. He added, "I must be super focused on /xAI and Tesla (plus Starship launch next week), as we have critical technologies rolling out."
Tesla is down 19.8% since the beginning of the year, and at $304.24 per share, it is trading 36.6% 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 $5,152.
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