This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Things can change in a hurry. After Tesla (NASDAQ: TSLA) saw its stock price explode following President Donald Trump's victory in early November, much of that rally has now been erased, a trend that continued this week. Shares of the electric car maker had fallen more than 16% for the week so far as of market close on Thursday.

Blame Europe

The big culprit hurting the stock this week is coming from Europe. According to the trade organisation Acea, sales of Teslas in January declined by 45% across the European Union and United Kingdom. This happened while the regions saw electric car sales increase significantly.

Meanwhile, investors are bracing for Q1 sales to be the lowest seen since late 2022. Check out the graph below of the stock's recent moves.

TSLA data by YCharts

Some surmise that the price drop could be attributed to investors taking gains after the incredible rally, while some think Tesla CEO Elon Musk's political actions in recent months have hurt the brand.

BBC recently cited an unnamed former senior director of Tesla's Europe, Middle East and Asia division as saying that politics is "definitely one of the reasons for the decline," but that there are also a "cumulative number of things that are piling up a domino effect."

Tesla shares' valuation rose too far too fast

It's hard to know the leading factor impacting the stock right now, but I think it's simply a case of the valuation running too far too fast. After the epic post-election run, Tesla's valuation peaked at nearly 194 times forward earnings estimates, well ahead of peers in the "Magnificent Seven." This makes the stock much more susceptible to pullbacks, even on minor bad news. I'm still sceptical of tech and AI valuations, given some of the challenges ahead.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.