Elon Musk's feud with Trump negatively impacts Tesla, causing 14.3% stock drop

From Yahoo Finance: 2025-06-07 07:00:00

Tesla investors have seen Elon Musk’s involvement with Donald Trump negatively impact the company. Musk’s tenure running DOGE led to European customer backlash and declining sales in key markets. Musk’s feud with Trump caused a 14.3% drop in Tesla’s stock, erasing $153 billion in market cap, the largest one-day decline in its history.

Musk’s actions have put Tesla in a precarious position, facing potential penalties from the administration. His control over the board, with a 30% stake in the company, makes it difficult for disgruntled shareholders to force him out. Legal battles over Musk’s stock package could further jeopardize his control and Tesla’s future.

Tesla’s valuation relies heavily on Musk’s promises of future innovations, creating a substantial “Musk magic premium.” However, this premium could diminish if Musk were to leave, impacting the stock’s value. Shareholders face a dilemma as Musk’s actions continue to undermine the brand, raising concerns about the company’s future under his leadership.

Read more: What Elon Musk’s feud with Trump means for Tesla shareholders