Why Tesla (TSLA) Shares Are Trading Lower Today
What Happened?
Shares of electric vehicle pioneer Tesla (NASDAQ:TSLA) fell 6.4% in the pre-market session after anxiety and uncertainty rattled markets as the major stock indices pulled back in the morning session amid concerns about "reciprocal tariffs" to be announced later in the week. The planned tariffs, scheduled for April 2, 2025 (dubbed Liberation Day), were targeted at all countries where the United States had a trade deficit.
Simply put, if a US trading partner imposed higher tariffs on American goods than the US did on theirs, the "reciprocal tariffs" would apply.
The prospect of heightened trade tensions seemed to have stoked fears of stagflation (slower economic growth and elevated inflation) as the anticipated tariffs will likely raise input costs for businesses.
Separately, Stifel analyst Stephen Gengaro lowered the stock's price target, citing concerns related to the slow rollout of the new Model Y. Gengaro noted that Model Y sales may be limited by several headwinds, most notably, a slowdown in global EV demand and intensifying competition.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Tesla? Access our full analysis report here, it's free.
What The Market Is Telling Us
Tesla's shares are extremely volatile and have had 125 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 5 days ago when the stock dropped 6.3% on the news that stocks pulled back (Nasdaq -1.5%, S&P 500 -1.2%) amid fresh concerns about trade tariffs. The pullback followed comments from President Trump clarifying the scope of his administration's 25% tariffs on Venezuela. He noted that it would apply to any country that does business with Venezuela. For example, 25% is on top of the already-in-place 20% tariff on China because China imports oil from Venezuela, which could translate to a 45% tariff on some Chinese goods. This announcement could significantly raise the operating costs for affected companies and institutions. Adding to the market unease, the President announced plans for new tariffs on auto imports before the planned "reciprocal" tariffs on April 2, 2025.
Tesla is down 32.7% since the beginning of the year, and at $255.01 per share, it is trading 46.9% 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 $7,302.
Today's young investors won't have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
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