Tesla shares have been falling recently as investors cash in on the rapid rise in the company’s stock after the U.S. presidential election. The initial boost from the election seems to have worn off, and Tesla’s stock is now seeing a decline.
On Friday morning, Tesla shares dropped nearly 5% in U.S. premarket trading, continuing a downward trend that started earlier in the week. The stock had a significant drop of 8% on Wednesday, December 18, which was Tesla’s worst day since Donald Trump won the presidential election in November.
Why Did Tesla Shares Rise After Trump’s Victory?
After Trump’s election win, Tesla’s stock saw a sharp increase. This rise was driven by investors who were optimistic about the company, partly because of Tesla CEO Elon Musk’s close relationship with Trump. Musk was even appointed to help lead a government department called DOGE (Department of Government Efficiency), a name that has some similarity to the popular cryptocurrency Dogecoin, which Musk supports.
Tesla shares are still up 65% from November 5, the night of the U.S. election. Musk had also made a $277 million investment in Trump’s campaign, which made investors believe the company would benefit from the new administration.
What Else Is Happening with Tesla?
In November, it was announced that the new U.S. president’s administration plans to create a federal agency to regulate autonomous (driverless) transport. This is a good sign for Tesla, as the company is investing heavily in autopilot technology and plans to launch a robotaxi service. In October, Tesla introduced the Cybercab, an electric vehicle designed for self-driving taxi services.
However, Tesla’s autopilot technology isn’t fully ready yet, and even the Full Self-Driving (FSD) feature still requires a person to be behind the wheel.
What Does This Mean for Tesla’s Future?
While Tesla has had an exciting year, its stock is facing challenges as investors pull back. The future of the company will depend on how well Tesla can develop and roll out its autopilot and robotaxi services. As of now, Tesla is still working on perfecting its technology, which may take more time.
For more information on Tesla and its stock performance, visit CNBC.