synopsis

Analysts say Musk's political involvement risks alienating consumers and employees, particularly as the Trump administration exerts increasing influence.

Shares of Tesla, Inc. dropped more than 2% Tuesday morning, heading for a fifth consecutive day of losses, which would mark the longest losing streak since early January. 

Investors are losing confidence due to the EV giant's declining sales across key regions, while CEO Elon Musk's focus on political activities — especially as part of the Trump administration — adds to the pressure.

This week, new complications emerged as Musk and co-investors submitted a bid of $97.4 billion for the non-profit entity that controls OpenAI. 

The Financial Times reported that this move complicates the startup's efforts to convert to a for-profit entity under CEO Sam Altman. 

Musk's xAI is a direct competitor to OpenAI.

Oppenheimer analysts are concerned that Musk's bid for OpenAI is distracting from Tesla's core challenges, highlighting growing risks to Wall Street's estimates as competition in both EVs and autonomous vehicles intensifies. 

The research firm also noted that Musk's political involvement risks alienating consumers and employees, particularly as the Trump administration exerts increasing influence. 

Oppenheimer added that negative trends in California and European EV registrations, alongside soft early data from China, further dampen Tesla's outlook.

Meanwhile, in China, BYD reportedly plans to make its "God's Eye" driver-assistance system standard in lower-cost vehicles priced from 100,000 yuan ($13,700). 

BYD also plans to incorporate software from DeepSeek, a Chinese AI startup that recently created ripples. Tesla is still waiting for approval to trial its Full Self-Driving features in the Asian nation.

TSLA sentiment and message volume Feb 11 as of 10:00 am ET | source: Stocktwits

Retail sentiment on Stocktwits, where Tesla has over a million followers, reflects growing skepticism. Early Tuesday, the platform's sentiment reading for Tesla remained 'extremely bearish,' accompanied by a surge in message volume. 

Many retail investors have criticized Musk's focus on political activities and the rising competition from companies like BYD.

One user said they were glad about selling shares, with Tesla's robotaxi plans remaining the "only hope."

Another user voiced frustration with Musk's leadership, pointing to Chinese automakers offering better technology at the same or cheaper price.

Tesla's stock is trading at a hefty 119.5 multiple of estimated 2025 earnings. 

However, shares of the company are now just 3% above analysts' average price target of $336.42, signaling declining confidence from Wall Street after a red-hot rally following Trump's election victory.

(1 Chinese Yuan = $0.14)

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