Trump-Musk Feud Causes $152B Tesla Stock Drop, 3.67% Recovery

Last week, a notable dispute between Donald Trump and Tesla CEO Elon Musk played out on social media, resulting in a significant drop in Tesla's stock price. The company's market value decreased by 152 billion dollars, setting a record for the largest single-day decline in its history. However, this downward trend did not continue, as Tesla's stock price recovered by 3.67% by the end of trading on Friday.

Financial analysts on Wall Street have asserted that this conflict, referred to as the "Trump-Musk split," will not have a lasting impact on Tesla's business operations. This includes Tesla's ambitious plans for autonomous driving and its upcoming launch of the Robotaxi service in Austin on June 12th. The company has projected that this new service could unlock tens of billions of dollars in market value.

Seth Goldstein, an analyst, noted that while the relationship between Trump and Musk can influence Tesla's stock and investor sentiment, it does not significantly affect the company's core business. Goldstein further explained that the potential loss of Trump's favor might have short-term implications, but Trump's administration had already indicated plans to reduce electric vehicle subsidies, which would negatively impact all electric vehicle manufacturers, not just Tesla.

Adam Jonas, an analyst, echoed this sentiment in a report, stating that the long-term factors driving Tesla's stock value, such as leadership in artificial intelligence, autonomous technology, manufacturing, supply chain restructuring, renewable energy, and critical infrastructure, are largely independent of political influences.

Gene Munster, an executive partner at a management company, also weighed in, suggesting that the White House is unlikely to impede the development of autonomous services. He argued that autonomy is a core component of artificial intelligence, and for the U.S. to lead in this field, it must first dominate in physical autonomy. Munster predicted that rational decision-making would prevail, and the federal government would continue to support the growth of these services.

Goldstein also commented that he does not expect the government to implement many measures to hinder the development of Tesla's autonomous taxi service. He noted that the Department of Transportation is currently reviewing federal safety standards for autonomous vehicles. Goldstein speculated that if Trump were to target Musk, he might do so more directly by reducing contracts with SpaceX rather than implementing complex and subtle policies.

In summary, while the public feud between Trump and Musk caused a temporary market reaction, financial analysts remain optimistic that Tesla's long-term prospects will not be significantly affected. The company's innovative projects, particularly in the realm of autonomous driving, are seen as resilient to political fluctuations.