TOP STORY
📉 Tesla Has It's 2nd Worst Month Ever, Falling 30%

😰 February is officially over, and the numbers are in - it was a rough month (and an even rougher week).

📉 Nvidia ($NVDA) reported earnings this Wednesday (see my breakdown here), and despite great numbers, it wasn’t the lifeline the market was hoping for, causing Nvidia to tumble ~9% this week and dragging the rest of the market down with it:

• the S&P 500 (which is ~6% Nvidia) fell 1.2%

• the Nasdaq-100 (which is ~8% Nvidia) fell 3.6%

📈 Thankfully, Friday saw a bit of a bounce back to soften the blow - with Nvidia up 4% and the S&P up 1.6%, but not nearly enough to offset the week’s losses.

🫣 The market remains in a state of ‘extreme fear’ (according to the Fear & Greed Index), and you can tell from the headlines. Here are just a few from today:

• 🚨 Stocks face a ‘fog of uncertainty’ as global risks keep mounting

• 🚨 Wall Street falls sharply as Nvidia tumbles 8.5% and AI mania falters

• 🚨 Ever-Bearish Grantham Insists AI Is a Bubble Waiting to Pop

🔍 But rather than endlessly speculate on whether this is a short-term blip or the start of a crash (which I already talked about 2 weeks back) - I want to focus today on one stock that had an exceptionally brutal month - Tesla ($TSLA).

🐶 While Elon’s been focused on running DOGE (the Department of Government Efficiency), Tesla just clocked its 2nd worst month ever - falling a massive 28% (compared to only -1.2% for the overall market). So, let’s take a look under the hood at what’s been going on with Blossom’s favorite EV stock 👀

🚘 Tesla Q1 Sales are in Rough Shape…

📉 As a quick recap from Tesla’s most recent earnings (reported Jan 30), Tesla’s automotive revenue fell 8% after it recorded its first-ever annual drop in deliveries.

⚠️ While Tesla’s next earnings aren’t till April, there have been some early warning signs that the company might be in for a rough Q1:

• 🇪🇺 Tesla’s January sales in Europe are down ~50% year over year, while overall EV sales in Europe have jumped 37% (meaning Tesla is aggressively losing market share)

• 🇨🇳 Tesla’s January sales in China are down ~15% year over year

• 🇺🇸 Tesla’s January sales in the US are down 13% year over year, according to estimates from one analyst at Freedom Capital Markets

Some of this is likely due to the lack of new Tesla models and competition heating up (like $BYD in China, whose stock is up 35% this month) - but many investors also believe that Elon’s high-profile political activities are hurting the stock.

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TOP STORY CONTINUED
🤬 Elon’s Political Antics Are Making Some Investors Angry (and Potentially Hurting Sales)

🤔 I normally try to steer clear of the politics in the Buzz, but in this case it’s having a direct impact on the stock, so let’s talk about them and try to answer the question “are Elon’s political activities helping or hurting the stock?”

📈 Elon’s political affiliation, and Trumps big election win, were at first a big positive - causing Tesla stock to soar a massive 73% to new all time highs, but now it seems sentiment is shifting - even among Elon’s former supporters.

• 👎 Supporters are upset that Elon is spending too much time distracted with DOGE

• ❌ Haters are boycotting Tesla altogether

🏈 Dave Portnoy, the Founder of Barstool Sports and an influential figure in the retail investing community, sums up the concerns:

🪧 Elon’s haters also have a lot to say - and are much less nice than Portnoy - with many protesting and vandalizing Tesla showrooms. And this isn’t just a few angry people - Axios reports that 49% of Americans hold negative views of Musk and 30% have an unfavorable view of Tesla - up from under 25% a little over a year ago.

📉 Brand reputation analytics firm Caliber also reported that Tesla's "Trust & Like Score" has fallen 13 points over the past two years.

✅ On the other hand, Republican favorability of Tesla hit an all-time high this month and some say that it’s difficult to know whether Elon’s politics have been a net loss or a net gain for sales.

👎 In my opinion, I think they will be a net loss, as EVs have traditionally been purchased by more left-leaning, environmentally conscious consumers, but we’ll have to wait and see what the data shows to know for sure.

⭐️ The Good News

Ok - I’ve been flagging a lot of negatives, so let me quickly sum up some of the positives, and what all this means for Tesla stock moving forward before jumping to the other big news of the week:

• 🟢 Tesla announced the delivery of the first revised Model Y Juniper in China this week, with more markets expected soon. Tesla has also activated some FSD (or Full-Self Driving) features in China which may improve its competitive positioning

• 🟢 Tesla is set to launch the long-awaited Model Q - a more affordable entry-level Tesla - in June.

• 🟢 Some Tesla bulls argue that the declining sales are not due to politics but instead due to “Tesla’s decision to temporarily shut down all four vehicle manufacturing plants simultaneously for retooling” in advance of the new model roll-out (meaning the sales drops would only be short-term).

🤔 So What’s All This Mean for Tesla Stock?

🤷‍♂️ Overall, whether Tesla will continue to crash or rebound is a big mystery. Even the experts are having trouble deciding one way or another:

For me, as I posted on Blossom, I exited my Tesla position on December 17 (which luckily, turned out to be the exact day Tesla peaked 🤣). My rationale was that the massive rally from Trump’s election was making Tesla too speculative for my liking - as the stock was trading at ~140x forward earnings.

With the recent drop, Tesla is down to 92x forward earnings, but even though that’s much lower than before - it’s still far above the S&P 500 average of 21x, so it’s hard to call it a ‘discount,’ but that’s for you to decide 🫡

To wrap up I’ll leave you with this quote:

ALSO IN THE NEWS
🗞️ Other Key Headlines this Week

📉 Bitcoin Has It’s Worst Month Since June 2022

• Bitcoin fell 17% in February, its worst monthly drop since June 2022 (when Celscius halted withdrawals and triggered market panic).

• The drop comes amid rising economic uncertainty, inflation concerns, and a major security breach where hackers stole $1.5B in Ethereum from the Bybit exchange.

• Bitcoin has now dropped below $90,000 for the first time in three months, signaling potential weakness in the crypto market.

• Bitcoin is still up 25% since Trump was declared the winner of the US presidential election as many investors continue to be optimistic about Trump’s crypto-friendly outlook.

🤖 Open AI Launches GPT 4.5 to Mixed Reviews

• OpenAI released the much anticipated GPT-4.5 with early access available to Pro users via a $200/month ChatGPT subscription.

• While GPT-4.5 offers improvements in creativity and speed, early testers say it delivers only marginal gains in reasoning and accuracy over GPT-4.

• The underwhelming reception raises broader concerns about whether AI progress is slowing down as investors increasingly demand rapid breakthroughs to justify the massive capital pouring into the sector.

😮 Rivian Surprises Doubters By Reporting It’s First Profit Ever

• Rivian ($RIVN) reported its first-ever profitable quarter of $140M for Q4 - over double analysts’ expectations.

• Despite the massive win, Rivian fell 5.2% this week after it projected to sell only 48,500 cars in 2025 - well below Wall Street's expectation of 55,000 and even less than its sales of 52,000 in 2024.

• Even so, achieving profitability was a major milestone and was the CEO’s core promise to investors in the previous 2 quarters.

• The Q4 profitability has increased confidence in leadership and created a more sustainable position for the company, which up until this quarter was losing money on every car it sold.

😰 Trump Announces the Delayed 25% Tariffs on Canada and Mexico Will Take Effect March 4

• Trump confirmed that 25% tariffs on imports from Canada and Mexico will take effect on March 4 after a previous one-month delay in exchange for more troops at the Canadian and Mexican borders.

• Trump says the flow of drugs into the US remains at “unacceptable levels” and says the tariffs will remain in place “until it stops, or is seriously limited.”

• Trump also announced that China will face an additional 10% tariff on the same day (on top of the existing 10% tariff already in place)

FROM THE BLOSSOM COMMUNITY
⭐️ Featured Discussions this Week

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