How does Wall Street view Tesla's future after Trump and Musk's public "breakup"?
The public dispute between Trump and Musk has drawn the attention of Wall Street analysts to Tesla's stock price movements. Although the insults and accusations between the two have subsided, investors remain concerned that this dispute could impact Tesla's weak stock price this year. Tesla's stock price plummeted 14.3% on Thursday, with a market value evaporating by $152.3 billion, and Musk's personal wealth shrinking by nearly $20 billion. Analysts believe that the threats from both sides are unlikely to escalate into a more serious situation
According to the Zhitong Finance APP, Wall Street analysts are closely examining the policy dispute that erupted between Tesla (TSLA.US) CEO Elon Musk, founder of xAI and SpaceX, and U.S. President Donald Trump on Thursday, Eastern Time, as well as the fierce verbal conflict regarding potential significant increases in the budget deficit due to tax cuts. Although their series of insults and accusations have come to an end, investors are still questioning whether this "Musk-Trump drama" will severely impact Tesla's weak stock performance this year.
On Friday, pre-market trading saw Tesla's stock rise narrowing to around 4.2%, after White House sources stated that President Trump has no plans to speak with Musk. On Thursday, Tesla's stock plummeted by 14.3%, with a market value evaporating by $152.3 billion in a single day, marking the worst single-day performance since March 10. Musk's personal wealth shrank by nearly $20 billion, and Tesla's stock has fallen over 30% this year.
The latest signal suggesting a possible easing of the intense dispute between Trump and Musk came from legendary hedge fund figure and major Republican donor Bill Ackman, who posted on social media platform X as a peacemaker, stating that everyone is working for the national interest and should coexist peacefully. Musk replied to Ackman, saying, "You are right." Therefore, Musk's response to Ackman is seen as both sides beginning to back down.
The fallout between former allies Trump and Musk has put Republican figures in a dilemma, as they find themselves unable to offend either side. Congressman Don Bacon, representing a highly competitive district in Nebraska, bluntly stated that Republicans should "stay out of it and avoid the fight," as they fear offending Trump and are even more afraid of Musk retaliating with nearly $300 million in campaign contributions, potentially funding Democratic opponents. Meanwhile, Democrats are watching from the sidelines, openly saying, "Merry Christmas."
Fiona Cincotta, an ETF index analyst from Citigroup on Wall Street, stated that the threats exchanged between Musk and President Trump are clearly unlikely to materialize. "I don't think this will escalate into anything more serious than a war of words in just a few days," Cincotta emphasized.
Dan Ives, an analyst from Wedbush Securities, pointed out that this conflict has not changed the firm's optimistic stance on Tesla and its humanoid robots and autonomous driving prospects, but it is still considered a "fly in the ointment" under the electric vehicle industry regulatory framework likely to be dominated by the Trump administration in the near future.
CFRA analyst Garrett Nelson, who holds a more cautious view, stated that the sharp drop in Trump's stock price actually reflects multiple factors: such as the unreasonable surge following Tesla's first-quarter earnings report; the ongoing loss of market share in electric vehicles in China and Europe; and the market's realization that next week's Tesla Robotaxi autonomous taxi launch event in Austin may disappoint investors At the same time, the analysis team of Wall Street financial giant Goldman Sachs has lowered Tesla's target price from $295 to $285, indicating that Goldman Sachs believes Tesla's stock price will continue to weaken over the next 12 months, primarily due to weakening monthly data on electric vehicles from the United States, Europe, and China, as well as potential regulatory challenges under a future Trump administration that may be unfavorable to Tesla's FSD and humanoid robot development path.
On the Seeking Alpha investment research platform, analyst KM Capital holds a positive attitude towards Tesla's upcoming Robotaxi autonomous taxi. "Even if Tesla struggles to surpass Waymo, it will still rank second in the Robotaxi autonomous taxi industry. Considering the industry is expected to experience explosive growth, it will still create substantial value for Tesla's shareholders," KM Capital noted in a report
