Trump Says He’s Buying a Tesla Amid Boycotts — Is It Time To Invest?
Written by
Marc Guberti
Edited by
Rebekah Evans
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President Trump has made a flurry of executive orders during his time in the White House, but he’s not the only one who has been moving quickly. Elon Musk has been spearheading the Department of Government Efficiency (DOGE) in a bid to remove wasteful spending of money.
However, Musk’s role in the government has attracted sharp criticism and it has translated into struggles for Tesla. Vandalism has been soaring against Tesla vehicles, but it isn’t just the bad actors. Tesla’s sales have been dipping and that prompted President Trump to give the carmaker a boost. He said that he would buy a Tesla and had a red Tesla propped on the South Lawn of the White House.
Does Trump’s eagerness to support Tesla suggest a buying opportunity for Tesla stock or are investors better off avoiding the stock? Let’s dive into this below.
Sales Were Dipping Before Musk Got Into Politics
To be clear, it’s not like Tesla was reporting booming financial growth rates before Trump’s second term. Tesla’s automobile sales only increased by 2% year-over-year in Q3 2024. Growth rates have gotten worse, with automobile sales dropping by 8% year-over-year in Q4 2024.
Vince Stanzione, self-made multi-millionaire with over 37 years of experience in business, investing and trading, explained some of the obstacles Tesla had before Musk headed DOGE.
“Buyers will decide on other factors such as price and resale values, both areas that Tesla remains weak on. Also, Tesla needs sales in China to pick up again and I don’t see any signs of that. In Europe, Tesla sales have been very weak and cracks were emerging before the Tesla political issues,” Stanzione said, when asked if Trump’s Tesla endorsement will affect sales.
Tesla has been battling tougher competition in China and Europe. That extra competition has given consumers more options.
“Tesla was certainly an innovator, but now we have so many brands such as BYD, MG, ORA and NIO making very high-quality cars with a lot of extras included and at a lower price,” Stanzione explained.
Musk’s Politics Don’t Align With Tesla’s Customers
Tesla has historically catered to liberal customers due to its electric vehicles. The thought of driving in an EV attracted those who felt like they were saving the planet one mile at a time. Now that Musk leans right, many liberals have been bashing his vehicle to the point of swapping their electric vehicles for gas guzzlers.
Some conservatives have been buying Teslas to support Musk, but most conservatives have already preferred gas-powered vehicles. Republicans are highly unlikely to buy electric vehicles based on a recent NPR survey. Stanzione summarized the results.
“Most Republicans are not Tesla drivers and prefer ICE (internal combustion engine) vehicles. The endorsement will not have any lasting effect on Tesla sales and, in fact, could have a backlash with most wanting a separation between business interests and politics,” Stanzione added.
The Stock Is Still Overvalued
Investors have been saying Tesla is overvalued for years. That’s nothing new, but Tesla’s decelerating financial growth rates put an extra emphasis on the stock’s disparity compared to its peers.
“As far as the stock, even after the recent 40% fall, it’s grossly overvalued. I believe the stock could drop another 50% in the next 18 months. That would take us back to the $125-a-share region where we were trading in 2021 and 2023,” Stanzione explained. “The forward Price-to-Earnings ratio (P/E) is over 65 and that is a crazy valuation for what is an auto company. It also does not pay a dividend. I can buy Toyota on less than nine times earnings and get a 3% yield.”
Rising competition and slow revenue growth can lead to Tesla’s stock trading more in line with other automakers. Tesla can deliver exceptional returns for investors if its robotaxis and Optimus humanoids deliver on their high expectations. However, investors have to consider what’s in front of them right now. Staying on the sidelines and waiting for a better entry may be the smart play.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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