Tesla share price plunged nearly 12 per cent since May 27 at $292.58, roughly coinciding with Elon Musk’s decision to pull back from the Donald Trump administration. Tesla stock has been on a roller-coaster ever since his endorsement of Trump in mid-July 2024 in his re-election bid, gaining 169 per cent from that point through mid-December. That was followed by a 54 per cent selloff through early April as a “Tesla Takedown” protest movement intensified.
Overall, Tesla shares are down 22 per cent this year, including Thursday’s losses. But the company is still the most valuable automaker worldwide by a long shot – carrying a market value of $1 trillion, far surpassing Toyota Motor’s market value of about $290 billion. Tesla trades at 140.21 times profit estimates, a steep premium to other Big Tech stocks like Nvidia, as per a Reuters report.
Donald Trump vs Elon Musk
President Donald Trump lashed out on Thursday against Elon Musk, saying he was “disappointed” by the billionaire’s public opposition to the sweeping tax-cut and spending bill that is at the heart of Trump’s agenda. The president also asserted that Musk’s days of blistering attacks on the bill were motivated by the proposed elimination of consumer tax credits for electric vehicles. Musk, the CEO of electric vehicle maker Tesla, has said he opposes the bill because it will increase federal deficits.
Trump further suggested he may terminate U.S. government contracts and subsidies given to Elon Musk’s companies.
The House of Representatives version of the budget bill proposes largely ending the popular $7,500 electric vehicle subsidy by the end of 2025. Tesla and other automakers have relied on incentives for years to drum up demand, but Trump promised during the transition to end the subsidy.
Big Blow for Tesla?
Tesla could face a $1.2 billion hit to its full-year profit, along with an additional $2 billion setback to regulatory credit sales due to separate Senate legislation targeting California’s EV sales mandates, according to J.P. Morgan analysts, as per a Reuters report.
Musk has slowly started to separate himself from the White House in recent weeks, stung in part by the wave of protests against Tesla.
“Elon’s politics continue to harm the stock. First he aligned himself with Trump which upset many potential Democratic buyers. Now he has turned on the Trump administration,” said Tesla shareholder Dennis Dick, chief strategist at Stock Trader Network.
Musk’s public attacks have upset potential Republican Tesla buyers as well, Dennis Dick added. One White House official on Wednesday called the Tesla CEO’s moves “infuriating.”
“I think the fallout for Tesla stock is self-evident! It’s down over 9 per cent on the day, and down significantly in the previous several days as it became obvious that the relationship was fraying. Tesla will be lucky to earn $1/share this year and is thus fundamentally worth no more than around $10/share versus the current $300. Live by the ‘meme vibe,’ die by the ‘meme vibe’!” “I see no meaningful fallout from this for the rest of the market, other than its slight effect on the indexes and index funds. The overall stock market has plenty of problems, but Tesla isn’t one of them,” Mark Spiegel, portfolio manager, Stanphyl Capital, New York said.
FAQs
Q1. Who is Tesla boss?
A1. Tesla boss is Elon Musk.
Q2. Who is President of USA?
A2. President of USA is Donald Trump.