Shares of electric carmaker Tesla (TSLA 3.86%) traded nearly 5% lower as of 11:24 a.m. ET today after analysts at JPMorgan Chase lowered their price target on the stock and maintained their sell rating.
Has there ever been a worse decline in the auto sector?
Shares of Tesla have done a complete 180 over the last five months. Following President Donald Trump's election run, the stock ripped over 90% only to give up all those gains and trade lower than it did heading into Election Day.
The move is so incredible that JPMorgan analyst Ryan Brinkman wrote that he "struggle[s] to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly."
Brinkman cut the firm's price target from roughly $231 to $135, the lowest among analysts. Brinkman is lowering his projected Tesla deliveries for the current quarter to 355,000, an 8% decline year over year. He is also concerned about Tesla CEO Elon Musk's increased role in government affairs.
"Mr. Musk's work with the Department of Government Efficiency has proven controversial domestically, and while as many members of the political right may be pleased as those on the left are displeased, the effect on Tesla sales seems nevertheless negative," Brinkman wrote.
Hard to gauge negative sentiment
Trying to gauge how negative sentiment toward Musk is impacting Tesla's business will be difficult. It certainly seems to be having an effect, but we really won't know until the first-quarter numbers come in, and it's also possible that the negative sentiment and ultimate impact is short-lived.
That said, I'm not entirely sure why Tesla surged so much following Trump's win, and still see an unfavorable risk-reward proposition in difficult market conditions. I'm avoiding the stock while it trades at 86 times forward earnings.
