Assessing The Fallout of The Trump Musk Spat and Its Impact On Tesla
πππThe recent public clash between President Donald Trump and Elon Musk has thrust both men into the spotlight in ways that overshadow mere market noise. Investor sentiment has been thrown into disarray following Musk's pointed criticism of Trump's "One Big Beautiful Bill" calling it a "disgusting abomination". Trump said he was "disappointed" in Elon Musk and said that Musk is not happy with the bill mainly because it proposes elimination of the EV credits that have long been an advantage for Tesla.
Trump has also posted on Truth Social "The easiest way to save money in our Budget, Billions and Billions of Dollars is to terminate Elon's Governmental Subsidies and Contracts."
Tesla $Tesla Motors(TSLA)$
Wall Street Analysts are Mixed on Tesla
Jed Dorsheimer, a William Blair analyst is bullish on Tesla primarily because Elon Musk has already confirmed plans of staying at the helm for another 5 years. He also expressed confidence that Tesla's upcoming Robotaxi launch will drive Tesla's share price up further for the 2nd half of 2025.
In contrast Ryan Brinkman, a JP Morgan Analyst is Bearish on Tesla as he has cut his estimate for global Tesla deliveries in Q1 to 355,000 vehicles, down from 444,000. He wrote that he struggled to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly.
Overall the consensus is a Hold rating, the Average Target price is USD 282.70, which is just 2% above Tesla's last closing price. This is according to 37 Wall Street Analysts surveyed by Tipranks.
Diverging Perspectives
Investors are now at a crossroads where caution meets opportunity.
The Positive Views are:
Innovative Edge : Tesla's leadership in electric vehicles, autonomous driving technology and AI positions it well for the future. Upcoming initiatives like the much anticipated Austin based launch of the Robotaxi program, and Tesla Bot, are seen as potential game changers that could redefine the EV landscape.
Execution Capability : Despite its high valuation, Tesla's operational efficiency and Elon Musk's track record for pushing technological boundaries suggest that Tesla can continue to deliver significant breakthroughs in the field.
In contrast the Negative Views are :
Political and Public Relations Risks :
Elon Musk's unpredictable behaviour and his public spats, such as the recent clash with Trump, could alienate investors and regulators alike. These political entanglements might increase operational and reputational risks.
Market Overvaluation Concerns :
Critics highlight that Tesla's stock may already be trading on high expectations. There are underlying issues such as sales slowdowns in key markets like Europe and China, suggesting that the current premium is not justified by its fundamentals.
Weighing the Risks and Catalysts
For investors, the decision to hold or buy Tesla stock now hinges on balancing short term volatility against its long term potential :
Catalysts for Growth - Proponents argue that if Tesla successfully rolls out its autonomous driving features and scales its energy solutions, these innovations could more than offset the temporary market jitters. Moreover, deepening market penetration and continued investments in battery technology could provide a robust growth trajectory.
Risks of Continued Volatility - In contrast, persistent political fallout or further public controversies could jeopardise investor confidence, or trigger regulatory scrutiny and add to Tesla's risk premium. This situation makes it crucial for investors to monitor both the company's strategic moves and broader market sentiments around Elon Musk's high profile Tech leadership.
Concluding Thoughts - The Investor's Dilemma
So is Tesla still a Buy After Trump Elon spat?
The answer largely depends on an Investor's risk appetite and long term outlook.
For those with a high tolerance for volatility and a belief in transformative technology, Tesla's recent dip might represent a strategic buying opportunity at a discount.
However more risk averse investors might reconsider their exposure until there is a clearer evidence that the political and market risks have abated.
Ultimately, while Tesla remains a Titan in the EV space, its future success may hinge on reconciling high expectations with the realities of political and operational challenges. The recent events are a stark reminder that in today's market, Tesla's technological promise is as intertwined with Elon Musk's leadership and public persona as it is with its financials.
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