The broader market has also suffered, with the Nasdaq Composite plunging 11% over the same period, marking its worst start to a presidential term since 2009. The S&P 500 is down 7.2%, while the Dow Jones Industrial Average has fared slightly better, losing 3.6%. Wall Street, which initially cheered Trump’s return to the White House, is now reckoning with the consequences of heightened tariffs, economic uncertainty, and intensifying market volatility.
Tesla’s woes deepen
Tesla’s stock closed Monday at its lowest level since October 2024, erasing all its post-election gains. Market participants who once saw the company as a major beneficiary of the Trump presidency are now fleeing amid concerns over Musk’s leadership and the company’s operational struggles. Monday’s decline was the biggest for Tesla stock since 2020 and far outstripped the 2.7% drop on Monday in the S&P 500. Musk, who spent hundreds of millions of dollars to help Trump’s reelection campaign, was rewarded with a prominent government position as head of the Department of Government Efficiency, or DOGE. The appointment initially fueled optimism that Tesla would benefit from Trump’s deregulatory stance, but that enthusiasm has quickly soured. Investors worry that Musk is spending more time slashing government budgets than managing Tesla, even as the company faces a demand slowdown in key global markets.
In Europe, Tesla sales dropped a staggering 76% in Germany in February, as Musk’s political involvement and his support for far-right parties alienated potential customers. Meanwhile, in China, where Tesla operates its largest gigafactory, the company saw sales of its China-made vehicles plummet 49.2% last month. Analysts say escalating U.S.-China tensions and rising competition from local electric vehicle makers such as BYD have severely dented Tesla’s growth prospects.
Adding to the company’s woes, Tesla has become a flashpoint for political protests. Last week, Tesla charging stations in Massachusetts were set on fire, a dealership in Oregon was targeted by gunfire, and demonstrators in New York City staged a protest against Musk’s role in cutting government jobs.
The Trump trade unravels
Tesla is not the only so-called “Trump trade” that has collapsed. Trump Media & Technology Group Corp, which owns the social media platform Truth Social, has seen its stock plunge 44% since Trump took office. The company, which relies heavily on Trump’s popularity, has struggled amid regulatory scrutiny and a shrinking user base.
Meanwhile, stocks that were grouped under the so-called “MAGA Seven” – a collection of companies that saw significant gains between Election Day and the inauguration – have also faced steep declines.
Robinhood Markets has lost 28.7% since the inauguration, despite early hopes that Trump’s pro-crypto stance would boost trading activity. Coinbase Global has plunged 39.1%, as the crypto sector remains under pressure. MicroStrategy, which rebranded as Strategy, is down 38.5%, despite its aggressive Bitcoin holdings. AppLovin Corp has dropped 29.6% since Trump’s inauguration and Ubiquiti Inc has declined 27.6%, while Williams-Sonoma is down 11.7%.
Other than that, Phunware Inc., a mobile advertising firm that skyrocketed as a Trump trade during the election, has plunged 40.6% since the inauguration.
A shaky start for the market under Trump
The broader market is also in trouble, with U.S. stocks recording their worst first 50 days of a presidency since 2009, according to Dow Jones Market Data. The S&P 500’s 7.2% drop has erased its post-election gains, while volatility has surged. The Cboe Volatility Index (VIX), known as Wall Street’s “fear gauge,” has spiked over 60% year-to-date, underscoring the heightened anxiety gripping the market.
Much of the selloff is tied to concerns over Trump’s economic policies. The administration’s aggressive tariff measures, aimed at countries like China and the European Union, have sparked fears of a global trade war. The U.S. economy, which showed signs of slowing even before Trump took office, is now at risk of recession.
The Atlanta Fed’s GDPNow model recently estimated that the U.S. economy will shrink at a 2.8% annualized rate in the first quarter. Meanwhile, the U.S. unemployment rate ticked up to 4.1% in February, further stoking concerns.
Trump’s presidency has been dominated by geopolitical tensions, erratic policymaking, and economic uncertainty. The contrast with his first term is striking. During the first 50 days of Trump’s initial presidency in 2017, the S&P 500 gained 4.8%, while the Nasdaq surged 5.8% and the Dow jumped 5.9%. This time, the market reaction has been the worst in over a decade, according to Dow Jones Market Data.
With investor confidence shaken, all eyes are now on how Trump’s economic policies will unfold in the coming months. For Tesla, the path forward remains uncertain. While Musk continues to insist that the company’s long-term vision remains intact, investors are increasingly questioning whether his divided attention between Tesla and Washington is becoming a liability.
Also read | US stock market loses $4 trillion in value as Trump plows ahead on tariffs
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
