Tesla Shares Tumble on First Trading Day of 2025; Equity Markets Fall

As the first trading day of 2025 kicked off, equity markets around the world experienced a downturn, with Tesla shares leading the decline. The electric vehicle (EV) giant's stock fell nearly 7% after reporting fourth-quarter and full-year 2024 delivery numbers that missed Wall Street expectations and marked the first annual decline in the company's history.



Tesla reported delivering 495,570 electric vehicles in the fourth quarter, falling short of the 498,000 vehicles expected by analysts polled by FactSet. For the full year, the company sold 1.789 million vehicles, slightly below the 1.793 million expected and a decline from the 1.809 million sold in 2023.

The New Year's Day explosion of a Tesla Cybertruck in Las Vegas may have also contributed to the stock's decline. The incident, which killed the driver and is currently under investigation, raised concerns about the vehicle's safety and potentially impacted investor sentiment.



Investors are also digesting the likelihood that the Federal Reserve will have to scale back its interest rate cuts or even reverse course and hike rates at some point in 2025. The 10-year U.S. Treasury note has gained nearly a full percentage point since mid-September, when the central bank delivered its first rate cut in four years. Bonds lose their value, making yields rise, when inflation is higher.

In addition to Tesla, other major stocks also experienced declines on the first trading day of 2025. The S&P 500 fell more than half a percent, while the Dow Jones Industrial Average and Nasdaq Composite Index also posted losses.



As investors grapple with big questions ahead of a change of power in Washington, markets seesawed on the first trading day of 2025. The market's inability to find a firm grip, as described by Michael Grant, co-CIO and head of long/short strategies at Calamos Investments, may be a sign of the uncertainty that lies ahead.

In this volatile market environment, investors should remain vigilant and consider diversifying their portfolios to mitigate risks. While Tesla's recent performance may be concerning, the company's long-term prospects and innovative products, such as the upcoming lower-priced EV and robotaxi initiatives, could still drive growth in the future. As always, it is essential to stay informed and make well-researched decisions when investing in the stock market.