The market reacted positively to Elon Musk’s improved relations with President Donald Trump as Tesla stock prices increased by 5% during opening hours. The situation improved market investor confidence because it removed potential political threats to the electric vehicle manufacturer. Politico reported about a possible Musk-Trump phone conversation on Friday yet a White House representative denied any scheduled call between the two leaders.
Musk accepted the reconciliation proposal from hedge fund manager Bill Ackman on X to decrease his hostilities against Trump. The dispute between influential figures caused Tesla’s market value to drop by more than $150 billion in one day which became the company’s most significant one-day loss. The stock market plunge allowed short-sellers to accumulate approximately $4 billion which became their second-largest single-day profit according to Ortex data.
The situation escalated because Musk condemned Trump’s complete tax and spending bill that plans to eliminate the $7,500 EV tax credit until 2025. The President responded to Musk by proposing to cut down government business deals with SpaceX and other companies under his leadership.
Hargreaves Lansdown analyst Matthew Britzman who serves as a Tesla shareholder believes the company would benefit from reduced tensions between Trump and Musk although a complete reconciliation seems unlikely. An active dispute with Trump poses potential difficulties for Tesla together with Musk’s future business ventures because the U.S. Transportation Department holds essential authority for Tesla’s mass production of unregulated robotaxis.
Tesla stock prices dropped 29.5% this year and fell by 14% on Thursday. The stock maintains a high market value at 120 times expected earnings which surpasses both automakers and tech companies including Nvidia. The stock prices have experienced intense fluctuations because Musk supported Trump during his presidential campaign and this initially boosted the stock but later caused declines because of weak sales and brand damage stemming from Musk’s political involvement.
