Why Tesla’s Stock Price Has Dropped Nearly 20% In 6 Months

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Tesla’s stock price continues to slide. It was down 2.15% today after a clear slide and then a leveling off at the lower level. It was definitely a “down and out” day rather than the roller-coaster ride you often see with stocks like TSLA.

This follows months of decline. In fact, over the past 6 months, the stock price has dropped 18.5%. Three particular things come to mind for me to explain this nearly 20% decline.

First of all, the thing that comes to mind immediately for me is the company’s missed robotaxi targets. Elon Musk said last July that the company’s new Robotaxi business would cover about 50% of the US population by the end of 2025, and then when it was obvious that wasn’t happening, there was big hype around a commitment that they’d be rolling out completely driverless cars (no human supervisors) before the end of the year. It’s now more than 3 months beyond the end of 2025 and there’s no apparent progress on this. There might be only one driverless Tesla in Austin, but certainly seems to be fewer than 10. That is not covering at least 50% of the US population unless you expect people to travel to Austin from around the country to try out the revolutionary Tesla Robotaxi. But aside from the obvious lack of service expansion, there’s simply no visible progress or significant updates around this.

The second thing that comes to mind is the fact that Tesla continues to struggle with vehicle sales and doesn’t have any narrative on how that is supposed to change except for the promise of coming robotaxis, which is a decade-long narrative that has massively underdelivered. There’s no hot new model for normal vehicle buyers. The Model S and X are being discontinued, the Model 3 and Y are struggling to maintain sales about a year and two after they were refreshed, the Cybertruck is a huge sales dud, the coming Cybercab seats two people and is meant to be completely self-driving — but may end up having a steering wheel and pedals after all, and perhaps a Cybervan? Unlike with BYD, XPENG, and other notable EV companies, there’s no exciting stream of coming models we can count on to boost sales — unless you think this Cyber lineup is going to really be a blockbuster hit despite the Cybertruck’s big flop.

But then a third big possibility popped into my mind today, and it’s not so much about Tesla doing poorly as a business but rather just the “market reality” of stock supply and demand. One of the biggest stock or tech stories lately is that SpaceX is preparing for an IPO. In fact, it is reportedly planning a record IPO that could value the company at more than a trillion dollars. For many years, people investing in Tesla (NASDAQ:TSLA) have been asking about and wanting to invest in SpaceX. Now, they’re about to get that opportunity. Elon Musk is even reportedly planning to have 30% of the coming stock raise dedicated to individual investors. Perhaps there’s a simple matter at play here that many people (and institutions) who own Tesla stock are selling the stock in order to have money ready to buy SpaceX stock…. If investors are freeing up cash to put into SpaceX, there’s a solid chance Tesla is the biggest holding they have to use to free up that cash. With the Tesla business seeming to go in the wrong direction in recent years but the stock prices still many times higher than it was several years or a decade ago, it seems highly unsurprising that investors would be acting in this way.

What does all of this mean if Tesla sales continue to slide, a broad Tesla Robotaxi service continues to be a myth waiting in limbo, and SpaceX goes public? Hmm … perhaps we’ll see.