Tesla shares climb as investors welcome Musk-Trump peace initiative
The conflict escalated when Trump threatened to withdraw government contracts from Musk’s companies, while Musk responded by suggesting that Trump should be impeached, sparking a heated exchange on social media.
Tesla shares gained on Friday as investors found reassurance after White House officials arranged a call with CEO Elon Musk to ease tensions following a public dispute with U.S. President Donald Trump.
The conflict escalated when Trump threatened to withdraw government contracts from Musk’s companies, while Musk responded by suggesting that Trump should be impeached, sparking a heated exchange on social media.
On Friday in Frankfurt, Tesla’s shares rose by roughly 5%, recovering from a 14.3% drop in New York the previous day, which had wiped out approximately $150 billion (approx Sh19.5 trillion) of the company’s market value.
Fiona Cincotta, senior market analyst at City Index, said, "It’s unlikely that Trump will actually end subsidies or contracts with Tesla. These threats don’t seem likely to materialize."
She added, "I don’t expect this to escalate beyond a brief war of words lasting a few days."
Analysts noted that Thursday’s selloff was driven by more than just the spat between Musk and Trump.
Garrett Nelson, senior equity analyst at CFRA Research, explained in a note, "The stock’s decline reflects several factors: an overextended rally following the Q1 earnings report, continued market share losses in China and Europe, and concerns that next week’s Robotaxi launch in Austin may fall short of expectations."
Nelson maintained a Hold rating, cautioning, "Expect more volatility ahead. Buckle up!"
Tesla shares, which surged to record highs after Trump’s election victory in November, have since faced significant declines.
Musk’s involvement in the U.S. administration and related cost-cutting efforts impacted Tesla’s reputation among investors and consumers.
Though Tesla remains part of Wall Street’s elite "Magnificent 7" the top seven companies by market capitalization, it has slipped to ninth place behind Berkshire Hathaway and Broadcom.
It has also fallen out of the $1-trillion market value club.
The wider stock market took a hit on Thursday amid the Musk-Trump feud but showed signs of recovery on Friday as hopes for a resolution emerged. Futures for the S&P 500 rose by 0.4%.
Kathleen Brooks, research director at XTB, said, "Elon Musk has indicated openness to cooling tensions with Trump, and stock futures improved Friday morning. For now, the risk seems mostly confined to Tesla shares in the short term."
