Tesla Stock Bounces Back After $150B Trump-Musk Fallout

• Tesla (TSLA) shares surged 6% to $302.55 on Friday after a 14% drop the previous day, driven by a public feud between CEO Elon Musk and President Trump, erasing over $150 billion in market value.
• The spat, fueled by Musk’s criticism of Trump’s $2.4 trillion tax and spending bill and references to Jeffrey Epstein, raised fears of a tougher regulatory environment for Tesla, though hopes of a truce briefly lifted sentiment.
• Analysts remain divided, with Wedbush optimistic about Tesla’s $1 trillion autonomous driving potential, while CFRA cautions about market share losses, safety concerns, and potential disappointment at the June 12 Robotaxi launch.

Tesla (TSLA) shares experienced a turbulent week, with a sharp 6% surge to an intraday high of $302.55 on Friday, following a dramatic 14% plunge the previous day that wiped out nearly all its post-election gains and erased over $150 billion in market value. The volatility stemmed from a high-profile public feud between Tesla CEO Elon Musk and President Trump, which has sent shockwaves through investors and sparked intense speculation about the future of their relationship and its impact on Tesla’s regulatory and market outlook.

The spat began when Musk, who recently stepped down from leading the controversial Department of Government Efficiency (DOGE), publicly criticized Trump’s proposed tax and spending bill, projected to add $2.4 trillion to the U.S. national debt over the next decade. Musk’s remarks escalated as he supported calls for Trump’s impeachment and referenced the president’s alleged ties to Jeffrey Epstein on his social media platform X. Trump retaliated on Truth Social, labeling Musk “crazy” and threatening to terminate government contracts with Musk’s companies, including SpaceX, which operates the Dragon spacecraft critical for U.S. space missions. Trump’s comments during a White House meeting with German Chancellor Friedrich Merz, expressing disappointment in Musk, further fueled the fire. Reports also surfaced, per The Wall Street Journal, that Trump was considering selling his red Tesla, while ABC quoted him dismissing interest in reconciling with Musk, whom he claimed “has lost his mind.”

Investor sentiment briefly lifted on Friday after unconfirmed reports from Politico suggested a call was scheduled between Musk and Trump, raising hopes of a truce. However, such a report was later debunked, leaving uncertainty about whether the two could mend ties. Wedbush analyst Dan Ives described the feud as a “social media and war of words” that exerted “massive pressure” on Tesla’s stock, driven by fears that Trump could shift from ally to adversary, potentially creating a challenging regulatory environment for Tesla in Washington. Ives remained optimistic, asserting that “cooler heads will prevail” and maintaining a bullish outlook on Tesla’s autonomous driving potential, which he values at $1 trillion. He argued the stock was “way oversold” on Thursday, presenting a buying opportunity.

Not all analysts shared Ives’ enthusiasm. CFRA’s Garrett Nelson, as reported by YF, maintained a ‘Hold’ rating with a $320 price target, citing multiple headwinds beyond the Musk-Trump conflict. Nelson pointed to Tesla’s recent stock run-up after its Q1 earnings, ongoing market share erosion in China and Europe, and concerns that the upcoming Robotaxi launch on June 12 in Austin might underperform, potentially triggering a “sell the news” reaction. Adding to investor unease, Bloomberg released footage of a fatal 2023 crash involving Tesla’s Full Self-Driving technology, raising questions about the safety and readiness of the company’s autonomous systems ahead of the highly anticipated event.

The Musk-Trump dynamic remains a critical factor for Tesla’s near-term trajectory. Their past alliance, which bolstered Tesla’s stock post-election, has unraveled, with Musk’s abrupt exit from DOGE – after its efforts to slash federal spending through layoffs and agency restructuring were deemed unlawful – further straining ties. Musk’s later retraction of a threat to decommission SpaceX’s Dragon spacecraft signaled a possible de-escalation, but tensions persist. As Ives noted, a reconciliation would be a “huge relief” for Tesla investors, given the mutual dependence between Musk’s vision for innovation and Trump’s political influence.

The broader context of Tesla’s challenges includes intensifying competition in the electric vehicle market and scrutiny of its autonomous driving technology. The Robotaxi launch is a pivotal moment for Tesla to demonstrate progress in its self-driving ambitions, but the combination of political volatility, safety concerns, and market dynamics suggests continued turbulence. As Nelson warned, investors should “buckle up” for more volatility in the near term.

WallStreetPit does not provide investment advice. All rights reserved.

• Bulenox: Get 83% OFF ... Use Discount Code: JJT3A
• Risk Our Money Not Yours | Get 50% to 90% OFF ... Use Discount Code: MMBVBKSM