Investors are reassessing the premise that justified Tesla’s astronomical stock price and made its founder, Elon Musk, the richest person in the world.
Tesla’s $1 trillion valuation made sense only if investors believed the electric car company was on a path to dominate the auto industry the way Apple rules smartphones or Amazon commands online retailing.
But Tesla’s shares have declined more than 40 percent since April 4 — a much steeper fall than the broad market, vaporizing more than $400 billion in stock market value. And the tumble has called attention to the risks that the company faces. These include increasing competition, a dearth of new products, lawsuits accusing the company of racial discrimination and significant production problems at Tesla’s factory in Shanghai, which it uses to supply Asia and Europe.
