Tesla Stock Plummets as Musk-Trump Feud Sparks Selling – Overnight Easing

Tesla (NASDAQ: TSLA) is reeling after a dramatic day on Wall Street, with shares closing down a staggering 14.26% at $284.70 on June 5th, a $47.35 loss that sent shockwaves through the market. While after-hours trading offered a slight reprieve, nudging the stock up 0.77% to $286.90, the underlying cause of the plunge, a public feud between CEO Elon Musk and President Donald Trump, has clearly left markets deeply unnerved.

This latest downturn caps a worrying trend for Tesla, which has seen approximately one-quarter of its market value evaporate since the start of 2025. The company’s market cap was reduced by an enormous $150 Billion yesterday, highlighting the impact of the feud, with bulls looking for some easing of tensions. Overnight trading shows Tesla trading positive by ~5.7% ($301), with the pre-market session due to kick off in the hour. It could well be a better day.

The catalyst for this market rout was a very public falling out between Musk and President Trump. The discord began when Musk vocally criticized President Trump’s proposed budget reconciliation bill, specifically its size, along with the elimination of subsidies for electric vehicles, labeling it a “disgusting abomination.” This criticism appears to have touched a nerve, with President Trump responding via Truth Social, expressing disappointment in Musk's stance and hinting at the potential termination of government contracts with Musk's various ventures, including Tesla, SpaceX, and Starlink. He stated, “Elon and I had a great relationship. I don't know if we will anymore.”

The implications of such a move are significant for Tesla. Beyond the direct financial impact of potential contract losses, the threat introduces a layer of regulatory uncertainty, particularly concerning Tesla's autonomous vehicle initiatives, which rely heavily on government approvals and collaboration.

Musk, not one to back down from a fight, reportedly retaliated with unverified allegations regarding President Trump’s past, further escalating the already volatile situation. The resulting media frenzy and investor anxiety have translated directly into downward pressure on the stock.

The ramifications extend beyond the immediate political drama. Reports indicate a continued decline in Tesla's European sales throughout May, adding to existing concerns about the company's growth trajectory. This decline, coupled with lingering tariff uncertainty affecting broader market sentiment, paints a concerning picture for Tesla's near-term prospects. The recent drop has erased much of the positive momentum generated earlier in the year when Musk announced his intention to dedicate more time to his companies.

The market's knee-jerk reaction underscores the extent to which Tesla's valuation is tied to the perceived stability and predictability of its leadership and regulatory environment.

Analysts remain divided on Tesla's future. One Wall Street analyst maintains a price target of $500, suggesting significant upside potential. However, the consensus price target of ~$300 is almost in line with current price, indicating the street wants to see more from the firm before looking upwards.

Moving forward, markets will be closely monitoring the evolving relationship between Musk and the Trump administration, any concrete actions taken regarding government contracts, and the continued performance of Tesla's sales in key markets. The resolution of this high-stakes conflict will undoubtedly play a crucial role in determining Tesla's trajectory for the remainder of the year and beyond.