Reasons Behind Today’s Drop in Tesla Stock

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Tesla (NASDAQ: TSLA) shares dropped 4.3% on Tuesday, following a decline in the S&P 500 and Nasdaq Composite, which fell 0.1% and 0.8%, respectively. This decline comes amid renewed tensions between Tesla CEO Elon Musk and former President Donald Trump, who has called for a review of the subsidies that Musk’s companies receive.

In a post on Truth Social, Trump mentioned that Musk might receive more government subsidies than anyone else in history and suggested that the Department of Government Efficiency (DOGE) evaluate these subsidies. This statement follows a controversial bill in Congress projected to add $3.3 trillion to the national debt, which includes a repeal of certain clean energy subsidies.

Additionally, Tesla is facing declining sales in key markets, with the rollout of the revamped Model Y underperforming against competitors, further fueling concerns among investors about the company’s valuation, which currently has a price-to-earnings (P/E) ratio of 180.

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