Musk-Trump Feud and Tesla Stock: Shares Rebound After ‘Peace Talk’

The Musk-Trump feud and Tesla stock crisis calmed on Friday after Tesla shares rebounded by 6% to $302.55, following a turbulent Thursday that saw them plummet more than 14%, the sharpest single-day decline since March.

Quick TakeawaysTesla shares dropped over 14% on Thursday, rebounded 6% on FridayMarket cap briefly fell below $1 trillion, with Musk losing $34 billion in a single day.Musk accused Trump of lying, claimed credit for his re-electionTrump threatened to cancel federal contracts with Musk’s companiesThe sharp decline was triggered by the fiery public fallout between Tesla CEO Elon Musk and U.S. President Donald Trump, sending shockwaves across the tech and political arenas globally.

The drop briefly knocked Tesla below its $1 trillion market capitalisation and raised new concerns about the risk of political entanglements for high-growth stocks.

What Sparked the Tesla Selloff?The feud began earlier this week when Musk slammed Trump’s latest tax and budget bill, arguing that it penalised innovation and particularly disadvantaged electric vehicle (EV) makers like Tesla.

Trump’s camp countered that Musk was upset over the bill’s plan to phase out federal EV tax credits, a key sales driver for Tesla.

By Thursday, the conflict exploded publicly.

Musk accused Trump of lying.Claimed on X (formerly Twitter) that “Without me, Trump would have lost the election.”Trump fired back on Truth Social, alleging that Musk had gone wild. He threatened to cancel the federal contracts of companies affiliated with Musk.Tesla shares nosedived 14.2% by market close Thursday, erasing tens of billions in shareholder value.

A Truce in Sight?Friday saw signs of de-escalation. Musk replied, “You’re not wrong,” to a peace-suggesting post by billionaire Bill Ackman. Trump, when asked by reporters, said: “Oh, it’s okay. It’s going very well, never done better.”

Despite Politico reporting that a reconciliation call was being arranged, a senior White House aide later told NBC the president “was not interested in a call at this time.”

Analyst ReactionDan Ives of Wedbush Securities, known for his bullish stance on Tesla, issued a note Friday stating:

“Musk needs Trump, and Trump needs Musk. Their cooperation, even if tactical, is key. We believe Tesla shares are way oversold and a resolution would send shares back on a growth trajectory.”

The firm emphasised the need to monitor the situation, warning that prolonged friction could escalate regulatory scrutiny or impact Tesla’s federal contracts through SpaceX and Starlink.

What’s at Stake for Tesla?Tesla’s reliance on government incentives, defense contracts, and satellite deployment agreements makes political neutrality a strategic necessity.

Tesla is still down 26% YTD as of June 6.SpaceX, Starlink, and Neuralink all have federal dependencies.A breakdown in the Musk-Trump relationship could jeopardise billions in business.Investor TakeawaysThe Musk-Trump feud and Tesla stock drama in 2025 underscore how quickly public disputes can ripple across markets. Key takeaways:

Volatility will remain high until a clear resolution or silence.Federal dependency matters in tech valuations.Personality-driven risk is now part of Tesla’s DNA, and needs to be priced accordingly.For now, investors will be watching closely. If peace prevails, Tesla could regain momentum. If not, the drama could have longer-term consequences for both Musk’s empire and its investors.