Investors in Palo Alto, California are feeling the heat as Tesla Inc. continues to struggle amidst a significant stock rout. Despite President Donald Trump’s recent show of support by purchasing a new Tesla, the company’s shares have been on a downward spiral, prompting even long-term believers to exercise caution. The stock, which has been the biggest decliner in the S&P 500 Index this year, experienced a 15% drop on Monday, only to see a modest 3% increase in premarket trading the following day.

With Tesla’s shares down 52% from their all-time high in mid-December, many are wary of potential further losses. Brian Mulberry, a client portfolio manager at Zacks Investment Management Inc., believes that there is still room for the stock to fall in the next 30-60 days. Despite holding over 270,000 Tesla shares, Mulberry remains hesitant to jump back in, even though he envisions the stock potentially rebounding above $400 in the future.

As the stock price continues to plummet, Wall Street analysts are adopting a more cautious approach, with many lowering price targets on Tesla. This caution is reflected in the options market as investors increasingly seek protection against further losses. The company’s future outlook remains uncertain, with concerns over dwindling demand in the US and declining sales globally, particularly in regions like China, Europe, and Australia.

Tesla’s recent struggles can be partly attributed to external factors, such as political opposition to electric vehicles and fears of an economic slowdown under the current Republican administration. Analysts have also adjusted their delivery estimates, with some warning that profit expectations may be too high. The stock’s volatility has reached new heights, leaving even the most optimistic investors with little to hold on to in the short term.

Despite the challenges facing Tesla, the company’s popularity among risk and momentum traders means that any potential recovery could be significant. However, for now, the stock remains in freefall, making it a risky investment for those with short-term horizons. As the market grapples with uncertainties surrounding trade policies and economic conditions, Tesla’s future hangs in the balance, with no clear signs of stabilization in sight.