What We Learned This Week

Tesla’s Rough Stretch Continues: Tesla stock has been on a rough streak, falling for five consecutive days and dropping over 17% in that span, including a sharp 6% decline on Tuesday. There’s no single catalyst behind the selloff—rather, Tesla is in the news for all the wrong reasons. One ongoing concern is Elon Musk’s close association with the current administration, where he’s actively involved in auditing government spending and advising on policy. This has raised investor concerns about whether his focus is spread too thin, especially with Tesla facing mounting challenges. While the company has a strong leadership team handling daily operations, there’s no question Musk remains the driving force behind strategic decisions. Then there’s the broader tariff situation, which has been weighing on automakers across the board. While Tesla manufactures its vehicles in the U.S., its supply chain is global, meaning rising raw material costs could put near-term pressure on margins if trade restrictions escalate.

The latest blow, responsible for Tuesday’s 6% drop, came from news that China’s BYD—the world’s top EV maker and Tesla’s biggest competitor outside the U.S.—is teaming up with DeepSeek on autonomous driving technology. DeepSeek made headlines recently with its AI breakthroughs, shaking up the industry. This partnership signals intensifying competition in the autonomous vehicle space, adding another layer of uncertainty to Tesla’s long-term prospects. When you combine that with ongoing demand challenges in the EV market and investor jitters over Musk’s divided attention, it’s no surprise the stock is under pressure. The question now is whether Tesla presents a buying opportunity. If you’re investing with a short-term horizon, it’s tough to justify stepping in given the volatility and uncertainty. But for those with a longer-term perspective, Tesla’s future in AI-driven mobility and autonomous driving could present upside—though that remains a big “if,” and patience will be required.

Uber Lands a Heavyweight Advocate: Bill Ackman’s Pershing Square hedge fund disclosed a nearly $2 billion stake in Uber, sending the stock up more than 8% after a dip earlier in the week due to soft forward guidance. Pershing Square, known for its concentrated portfolio, only holds about 10 positions at a time, making any new addition a significant statement. Ackman sees Uber as deeply undervalued, citing its dominant position in ride-sharing and rapidly improving cash flow. Uber’s public market journey has been turbulent since its 2019 IPO, facing challenges ranging from the post-IPO tech selloff to COVID shutdowns, labor shortages, inflation-driven market weakness, and ongoing regulatory battles. Despite this, the company has consistently executed well, pivoting into food delivery during the pandemic and navigating a tough operating environment while staying focused on long-term profitability.

CEO Dara Khosrowshahi has earned a reputation as one of the most capable leaders in tech, successfully steering Uber through constant headwinds. Ackman’s investment signals confidence that, if the company can catch a sustained period of stability, it has the operational discipline to unlock significant value. Given Uber’s track record of resilience and execution, it’s not hard to see why Pershing Square views it as an attractive long-term play.

Rates Aren’t Going Down Anytime Soon: Inflation isn’t cooling down as quickly as hoped, making a near-term drop in interest rates increasingly unlikely. This week’s Consumer Price Index (CPI) report showed a 0.5% monthly increase, putting inflation at an annualized 3%—well above the Fed’s 2% target. This marks the third consecutive monthly rise since inflation bottomed at 2.4% in September, with price pressures hitting everything from groceries to energy. Egg prices, in particular, have surged 15% just since December and a staggering 53% over the past year due to a severe bird flu outbreak disrupting supply. On a slightly positive note, housing costs appear to have stabilized, preventing an even greater inflationary spike.

With the economy still strong and unemployment low, pricing pressures remain sticky, and any new supply disruptions could make it harder for inflation to ease. If this trend continues, the Fed may face pressure to reconsider its approach, though it’s too early to call for tighter policy just yet. The incoming administration’s economic policies are also expected to have a mildly inflationary effect, but they are just one piece of a much larger puzzle. For now, markets seem to be pricing in an extended period of elevated rates, but another sharp inflation uptick could certainly shake that confidence.