Tesla shares fell on Friday, giving up gains since the U.S. election day and undergoing an epic reversal. After the U.S. election on November 5, the electric car maker was expected to benefit from the close relationship between Chief Executive Elon Musk and U.S. President Donald Trump, and the stock was among the top gainers. However, such bets have been unable to withstand growing concerns about Tesla's core business of selling cars.

At 11:53 a.m. on Friday, Tesla's stock price fell 4.6%, which is set to erase the US$700 billion market value expansion after the election. Investor confidence has suffered a series of blows in recent weeks, with some investors increasingly concerned that Musk, the electric-car giant's chief executive, has been distracted by his foray into politics.

"The strategy of betting that Musk's participation in politics will drive Tesla's stock price soar has not worked so far," said Adam Sarhan, founder of 50 Park Investments. "Investors who initially expected Musk's participation in politics to bring huge benefits were too excited, and now a calmer mentality has prevailed."


It turns out that the overall market environment is also not conducive to Tesla. Concerns about U.S. trade policy and economic growth have stalled a post-election speculative frenzy that pushed stocks to record highs. The S&P 500 is down more than 7% from its highs, while the Nasdaq 100 is in a correction.

Bank of America analyst John Murphy lowered his price target on the stock to $380 from $490 on Tuesday, citing concerns about new car sales, a lack of news about potential low-cost models and risks to the company's rollout of self-driving taxis.

Of course, some technical analysts say Tesla's stock price has entered what followers of technical indicators call oversold territory after a rapid decline, paving the way for a short-term rebound. Catalysts could include signs that sales are rising, an update from the company on its self-driving taxis, or a return to risk appetite in stocks.

Still, a rebound will have to overcome investor uneasiness about the company's valuation: Tesla trades at 88 times forward earnings, compared with 21 times for the S&P 500.

“Tesla’s forward P/E ratio remains very close to 90,” Miller Tabak + Co. "So the stock is still expensive," said chief market strategist Matt Maley.