Why Shares of Tesla Are Sinking Today

Shares of the electric vehicle (EV) maker Tesla (NASDAQ: TSLA) traded roughly 3.3% lower as of 12:21 p.m. ET today. Sales continued to struggle in Europe and the stock also fell, despite an analyst recommending that investors hold the name.

Sales in Europe aren't improving

Tesla's stock has been hit hard this year, a big part of which can be attributed to struggling global sales. The company reported roughly 337,000 deliveries in its first quarter of the year, the lowest level in over two years. Some investors believe the struggles have resulted from CEO Elon Musk's involvement in politics, which has damaged the brand.

Regardless of the reason, conditions don't seem to be improving. In April, data from the Spanish Association of Automobile and Truck Manufacturers showed that new Tesla sales fell 36% year over year, according to Reuters. Over the first four months, Tesla sales have decreased 17%, while EV sales in this time period, including hybrids, have surged 54%. It's a trend that has played out all year.

In other news, analysts at Jefferies reiterated their hold rating on Tesla, saying that "TSLA is now regaining some tech initiative with June's Robotaxi launch in Austin, but its edge may be scalability over technology as AV (autonomous vehicle) initiatives accelerate elsewhere."

Image source: Getty Images.

A lot riding on the June demonstration

With deliveries still apparently struggling, a lot is riding on Tesla's June Robotaxi demonstration that will supposedly feature the company's unsupervised full self-driving technology (FSD). Tesla trades at 135 forward earnings, much of which depends on the company's future initiatives.

The June demonstration could reinvigorate excitement around the stock; it also might come up short. I'm on the sidelines for now, given the big valuation and struggling core EV business.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Jefferies Financial Group and Tesla. The Motley Fool has a disclosure policy.