Elon Musk and President Trump in front of the White House. Photo: Andrew Harnik/Getty Images
Shares in Tesla sank early Tuesday after President Trump threatened to go after Elon Musk’s federal subsidies.
Why it matters: A few months ago Musk and Trump’s close relationship was seen as the key to making Tesla massively more valuable. Now, their split is becoming more of an existential threat to the company.
Catch up quick: Musk has been on the attack over Trump’s “big, beautiful bill,” promising to start a new political party to oppose the bill’s supporters if it passes.
- Late Monday night, Trump threatened to use perhaps his most powerful leverage over his former “first buddy.”
What they’re saying: “Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa. No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE,” Trump posted on Truth Social.
By the numbers: Tesla shares fell about 5% in pre-market trading Tuesday, a decline that would wipe nearly $7 billion off Musk’s personal net worth.
- The stock is down about 12% since early June when he first started going after the spending bill, which was followed in short order by a full schism with the president.
Between the lines: Even Musk’s biggest Wall Street supporters say they fear the possible fallout of the deepening tension between the two men.
- “As we discussed this BFF situation has now turned into a soap opera that remains an overhang on Tesla’s stock,” Wedbush Securities analyst Dan Ives wrote Tuesday morning, likening it to a junior high school friendship gone sour.
The intrigue: Tesla is due to report second-quarter delivery data on Wednesday, with analysts expecting them to drop about 13% from last year amid the ongoing backlash against Musk.
The bottom line: “At the end of the day being on Trump’s bad side will not turn out well..and Musk knows this and Tesla investors want this back and forth to end,” Ives wrote.
