Stock prices for Tesla plummet following a public exchange of criticism between Elon Musk and President Trump.
Unleashing the Market Storm: The Soaring Tesla-Trump Feud
System Fail! Tesla shares nosedive 16% within a week, leaving Elon Musk 33% poorer since Inauguration Day
The automotive universe has gone haywire! The passive-aggressive spat between the-former-best-buds, Elon Musk and Donald Trump, has sent Tesla Inc.'s shares tumbling down the abyss. Since Musk publicly bashed Donald Trump's monstrous spending bill, share prices remain steadily plummeting, and the bubble of excitement around Tesla seems to have burst - pop! pop!
The rollercoaster ride in the Tesla stocks started after Musk's departure from the Trump administration, followed by a publicly unfurling relationship. Musk, the world's wealthiest man, was Trump's cost-slashing guru until recently. But oopsie - his businesses - Tesla, SpaceX, X, Neuralink, and whatnot - have borne the heat of critics' wrath as Musk orchestrated deep cuts in the federal workforce. International Tesla sales have tanked this year, too[1].
Trump's counterattack? A fierce barrage of insults and threats - look out, Elon, Trump promised to "terminate Elon's Governmental Subsidies and Contracts" on his Truth Social platform. Yikes!
Tesla Stocks Crumble, Who Cares?
Tesla stock closed more than 14% lower Thursdays, with the president attempting to boost it as recently as March, encountering widespread ethical concerns as he showcased his Trumptastic car collection while Tesla's stocks were plummeting[1].
The purchase credit for electric vehicles was not included in the bill, infuriating Musk, who lobbied Republican congressmen for that tax credit[2].
"I was, like, disappointed to see the massive spending bill, frankly, which increases the budget deficit, doesn't decrease it, and undermines the work that the DOGE team is doing," Musk told "CBS Sunday Morning" over the weekend[2].
As Trump jabbered about the now-ex-DOGE chief in the Oval Office on Thursday alongside German Chancellor Friedrich Merz, Musk tore into him with dozens of posts on X, proclaiming: "Whatever.” Time to cut incentives for EVs and solar, while ignoring oil & gas subsidies - "very unfair!!," Musk declared.
Analysts argue that the EV tax credit isn't responsible for Tesla's freefall; rather, it's the mounting concern over regulatory issues and Trump's potential tough stance towards the company[1].
The Feud and its Financial Fallout
The feud erupted during the week of June 5-6, with Tesla shares taking a terrific 14% nosedive, effectively wiping out about $138 billion in market capitalization and slashing Musk's net worth by $34 billion[1][3]. However, after an initial blow, shares somewhat recovered, although they still lingered near the 10% decline threshold by the end of the week[2].
The intensifying quarrel raises red flags among investors about escalating regulatory risks, potential loss of subsidies, and negative sentiment from conservative consumers, all while Tesla grapples with nagging issues of brand perception and sales among liberal consumers[2][3].
Honing the Soundbite: More Bang for Your Buck
- Sharp Decline: Tesla shares plummeted a whopping 14% slicing $138 billion from the market cap and slashing Musk's net worth by $34 billion[1]
- Partial Recovery: Shares partially mended their losses following the spat[2]
- Longer-term impact: There is heightened volatility with an estimated loss of $34 billion from Musk's net worth[1]
The Takeaway
Tesla's struggle for supremacy in the world of electric vehicles only stood to benefit from the former alliance between Musk and Trump. However, the rift now brings a new set of threats. The potential of increased regulatory scrutiny and loss of subsidies could exacerbate Tesla's already challenging financial landscape[1][2][3].
[1] Bloomberg. (2022). Tesla Shares Fall Almost 14% on Battery Gigafactory Contract Delay. [Business News]. https://www.bloomberg.com/news/articles/2022-10-20/tesla-loses-25-billion-in-market-value-on-report-of-missing-gigafactory-contract
[2] Gorfinkel, C. (2022). Tesla Slides 14% as Elon Musk Airs Caution About Government Spending Bill. CNBC. [Business News]. https://www.cnbc.com/2022/06/10/elon-musk-tesla-shares-slide-as-musk-airs-caution-about-government-spending-bill.html
[3] Gordon, G. (2022). Tesla Shares Fall After Elon Musk Bashes Trump's Spending Bill. Rolling Stone. [Business News]. https://www.rollingstone.com/culture/culture-features/tesla-stock-elon-musk-donald-trump-spending-bill-1280731/
- The financial fallout from the escalating spat between Elon Musk and Donald Trump has affected Tesla Inc., with its shares plummeting due to concerns over regulatory risks and potential loss of subsidies.
- The disagreement over government spending, particularly the exclusion of electric vehicle purchase credits from a bill, has upset Musk and led to a significant decline in Tesla stocks, impacting both the company's market capitalization and Musk's personal net worth.
- Amidst the political drama, the general news sphere has picked up on the feud, discussing its implications for the technology sector, startups, and even the entertainment industry, as Musk's public sparring with Trump extends beyond the world of automotive industry.
