Tesla has been forced to contend with an increasingly degenerative outlook over the past two months, and Barclays doesn’t expect things to reverse from here. After underperforming for much of last year, shares of Tesla received a boost after Donald Trump won his second term in the White House last November, thanks to the close personal relationship between the president and Tesla CEO Elon Musk . From Nov. 5 to Tesla’s all-time closing high on Dec. 17, shares surged 91%, nearly doubling the price. But since its December heights, Tesla stock has been on a downward slide. Shares of the electric vehicle maker closed at $302.80 on Tuesday afternoon, marking a 38% pullback. TSLA 6M mountain TSLA 6M chart It’s impossible to point to a sole culprit, Barclays analyst Dan Levy wrote in a Wednesday note. Instead, multiple headwinds seem to be working in conjunction to cause the sell-off, including a reversal of technical factors that drove the previous rally. “Our best explanation is that there is an unwind of the powerful run that it had last fall post the US elections, which reflected a combination of sharp euphoria and technical factors — with fundamentals largely dismissed,” he said. “Bitcoin has also traded down since mid-December, and has largely mirrored Tesla’s decline in the last month. We believe this may reflect a general pull-back from speculative assets/Trump beneficiaries,” he added. Levy said Tesla’s underperformance over the past month has coincided with the broader underperformance of tech titans in the “Magnificent Seven” cohort. Microsoft , Amazon and Meta are all trading lower on the month, although Tesla has underperformed the rest of the basket. Fundamentals also are in closer focus, which is pressuring Tesla stock, he said. Tesla missed its fourth-quarter deliveries and earnings , and its sales in China have been weak . “The 2025 volume narrative has been de-emphasized, with Tesla merely noting a return to growth in ’25, and surprisingly alluding to battery supply challenges,” Levy wrote. “This is a contrast vs. the robust outlook provided on the 3Q24 call, in which Elon Musk said volume would grow by 20-30%.” Moreover, several headwinds exist to challenge Tesla’s Monday launch of its self-driving software in China, including data security concerns and domestic competition. Unfortunately, Levy doesn’t expect the near-term picture for Tesla to get much better, calling the stock’s short-term catalyst path “limited” and expecting “soft” first-quarter results. The analyst added that he was growing increasingly bearish about Tesla’s ability to improve profit margins, but expects the planned launch of the Robotaxi in Austin, Texas, in June to be a major catalyst for the stock. “We could see interest building into the event, with a ‘sell the news’ reaction on the event,” he wrote.
