Elon Musk's public clash with Donald Trump has triggered a significant drop in Tesla's stock, raising concerns among investors.
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Tesla’s stock is feeling the heat after influential investment analysts issued a downgrade, directly tied to CEO Elon Musk’s escalating feud with former President Donald Trump. Shares of the electric vehicle manufacturer plummeted by 4.5% at the start of trading on Wall Street, a stark reminder of how volatile the market can be in response to public disputes.
This setback follows a troubling trend for Tesla, which has seen its stock drop nearly 30% this year alone.
The feud heats up
On Thursday, Musk took to social media, calling for Trump’s impeachment, igniting a fiery exchange that has left many investors uneasy.
Trump retaliated on Friday, claiming Musk had “lost his mind,” despite some officials suggesting the spat was over. The analysts at Argus Research, who downgraded Tesla’s stock from a ‘buy’ to a ‘hold’, pointed to this feud as indicative of how the company’s stock is currently influenced by external factors rather than its underlying fundamentals.
Analysts weigh in
Analysts expressed their concerns further, stating, “We worry that the ongoing war of words between President Trump and Elon Musk, combined with the expiration of electric vehicle credits, could dampen demand for new Teslas.” This sentiment is echoed by Baird investment bank, which also downgraded its recommendation to neutral, citing the potential brand damage Musk’s political activities could inflict on Tesla.
Market reactions
While Tesla’s troubles unfold, the broader market presents a mixed picture. Even as Wall Street seems to be on an upswing following the onset of trade talks between the US and China, Tesla’s decline casts a shadow over the electric vehicle sector. The Dow Jones saw a modest increase of 0.1%, the S&P 500 rose by 0.2%, and the Nasdaq gained 0.4%. But for Tesla, the question remains: how will it navigate this turbulent landscape?
Trade talks and their impact
As trade talks continue in London, investors are watching closely. Jonas Goltermann from Capital Economics noted, “One month remains until the pause on the Trump administration’s reciprocal tariffs is set to expire, adding to the market’s cautious optimism.” The mixed signals from the trade negotiations contribute to the overall uncertainty affecting stock prices, including Tesla’s. Though trade representatives from the US and China are engaged in dialogue, the outcome remains uncertain.
Global market trends
On a broader scale, global markets are reacting to various factors. In Europe, the German Dax fell by 0.5%, while the French Cac 40 lost 0.2%. Amid these fluctuations, oil prices saw a slight rise, indicating traders’ optimism regarding the US-China trade discussions. Brent crude climbed by 0.71% to around $67 a barrel, a reflection of the cautious optimism surrounding these talks.
Canadian travel shifts
In a related note, Canadians are re-evaluating their travel plans to the US, with only 10% planning to visit this summer, down from 23% last year. This shift in travel intentions highlights the broader impact of Trump’s trade war on cross-border relations, with official statistics showing a 35% decline in Canadians driving to the US in April.
Future implications
Looking ahead, the implications of Musk’s political engagements and the potential fallout from the ongoing trade negotiations loom large. The economic landscape remains precarious, with analysts suggesting that the US’s hardline stance on trade and immigration could stifle growth. As we witness these developments, the stakes are high for both Tesla and the broader market.
In wrapping up, the situation is fluid. Investors, analysts, and market watchers alike are left questioning what comes next. Will Tesla recover from this latest setback? And how will the ongoing trade talks shape the future of not just Tesla, but the entire electric vehicle market? Only time will tell.
