Tesla Stock Bounces Back After Rare Crash as Elon Musk and Donald Trump Trade Explosive Blows
Tesla rebounds 4.5% in premarket after a feud between Elon Musk and Donald Trump nearly wipes out $140B in market value. What’s next?
- 14%: Tesla’s single-day stock plunge on Thursday
- 4.5%: Tesla’s premarket recovery on Friday
- $140B: Estimated value wiped from Tesla’s market cap in one day
- 2025: Year of heightened political and tech drama impacting stocks
Tesla shares rallied Friday morning, erasing some of Thursday’s staggering losses after a very public and very personal battle erupted between Elon Musk and former President Donald Trump. The electric vehicle titan’s stock nosedived more than 14% in a matter of hours—its worst plunge since March—after Musk and Trump exchanged biting criticisms over controversial government spending plans and EV tax credits.
The drama began when Musk slammed the so-called “Big Beautiful Bill,” criticizing its massive spending and potential harm to American tech innovation. Trump swiftly hit back, singling out Musk’s Tesla as a major beneficiary of tax credits that the bill would phase out. Sparks flew on social media, intensifying late Thursday as Musk fired off posts accusing Trump of “lying” and taking personal credit for Trump’s reelection—insisting that “without me, Trump would have lost the election.” The former president shot back, threatening to cut off all federal contracts with Musk’s companies, a move he claimed would “save billions.”
Markets recoiled. Tesla’s market cap tumbled below $1 trillion, sending shockwaves through Wall Street and social media, with many investors jittery about prolonged volatility in tech and auto sectors.
Analysts React: Is Tesla Oversold?
Leading financial experts, including Wedbush’s Dan Ives, highlighted that both Musk and Trump have much to lose—and possibly gain—by mending fences. As tensions cooled Friday morning, Tesla’s stock quickly rebounded 4.5% in premarket trading. Analysts suggested the market’s reaction was overblown and predicted a détente would rejuvenate investor confidence.
The backdrop: 2025 is shaping up to be a year where American tech and politics are more entwined than ever. With sector giants like Tesla and SpaceX facing growing regulatory, political, and financial scrutiny, every tweet and presidential statement can shift billions.
Q&A: Why Did Tesla Crash So Hard?
Q: Was it just the Musk-Trump spat that drove the stock lower?
A: The feud added fuel to market fears already simmering over government spending, potential removal of EV tax credits, and uncertain regulatory headwinds. Panic selling intensified as retail and institutional investors reacted to Musk and Trump’s escalating social media exchanges.
Q: Could federal contracts actually be canceled?
A: Canceling federal contracts for major companies like Tesla and SpaceX would be highly complicated and legally fraught. While Trump’s threats stoked fears, most analysts view actual cancellations as unlikely and politically risky.
How Can Investors Respond to Political Shocks in Tech Stocks?
- Don’t panic: Immediate selloffs often overreact to headlines and social media drama.
- Watch for rebounds: As seen Friday, oversold stocks can bounce sharply once sentiment stabilizes.
- Track regulatory news: Stay alert for genuine policy shifts from Congress or the White House that could impact tech and auto giants.
- Diversify holdings: Avoid tying your portfolio too tightly to any one high-profile CEO or politician’s next move.
What’s Next for Tesla and Elon Musk?
Industry watchers expect Musk to shift focus to innovation milestones as the company preps major EV and AI announcements for late 2025. Any sign of reconciliation or even silence between Musk and Trump could defuse volatility, helping Tesla regain its $1 trillion+ valuation. For now, the world’s second-richest man and America’s most controversial president remain unpredictable—and Wall Street is watching every move.
Don’t Miss the Next Move: If you want to stay ahead of the tech-and-politics curve, monitor trusted sources like Bloomberg, CNBC, and Reuters for fast-breaking updates.
Investor Action Checklist
- Monitor Tesla’s stock and government policy headlines daily
- React carefully, not emotionally, to political drama impacting tech sector
- Assess your portfolio’s exposure to high-volatility tech stocks
- Keep up to date with analysis from leading sources
Stay informed, stay calm, and make smart decisions as Tesla and the political spotlight continue to collide.