Investing.com - Tesla’s ability to replace some of its consumer base driven away by the political activities of CEO Elon Musk will likely influence the near-term performance of the stock, according to analysts at Oppenheimer.
The company has been hit by dwindling sales expectations for 2025, with analysts partly citing the impact of Musk’s controversial role in U.S. President Donald Trump’s new administration. Musk -- the world’s richest man -- has become a key backer of Trump and has spearheaded an effort to downsize the federal government through the so-called Department of Government Efficiency, or DOGE.
Musk’s push has led to widespread layoffs or buyouts of government workers, although several of the moves still face legal hurdles.
Fueled by DOGE’s tactics, many car buyers -- particularly those who identify as liberal or connected with the Democratic Party, the opposition to Trump’s Republicans -- appear to have begun ratcheting down purchases of Teslas.
Despite some conservatives coming to Musk’s defense, with Trump himself promising to buy a Tesla, the company’s deliveries in the first quarter are seen slipping to the lowest level in three years. Sales were already under pressure from an uncertain U.S. EV market and fierce competition from Chinese rivals.
Meanwhile, a poll from YouGov last week showed a decline in overall consumer sentiment towards Tesla (NASDAQ:TSLA).
"We see conservative buyers as an incremental positive, but note service, infrastructure, and product fit mismatch as limiting depth of demand," the Oppenheimer analysts wrote. The brokerage said that, as Tesla’s brand continues to be "politicized," worries also remain around a potential "brain drain" that could see an exodus of high-profile talent.
Along with Musk’s proximity to the White House, the analysts added that questions swirl around the electric vehicle maker’s artificial intelligence initiatives.
"We believe datapoints on both variables are mixed and we maintain our negative bias near term," the analysts said.