Introduction
Tesla Inc. (NASDAQ: TSLA) saw its stock plummet by 14% on June 5, 2025, after a public feud erupted between CEO Elon Musk and U.S. President Donald Trump Tesla share price. This sudden decline erased over $150 billion in Tesla’s market valuation, shaking investor confidence and raising fresh concerns about political risks impacting tech giants Tesla share price.
For a broader perspective on how stock markets react to political controversies, check out our article on Understanding Stock Market Volatility.
Musk vs. Trump: What Happened?
The drama started when Elon Musk criticized the Trump administration’s latest tax reform proposals, calling them “anti-innovation.” In response, President Trump publicly questioned Tesla’s eligibility for future federal contracts. This escalated into a digital war of words on X (formerly Twitter), which was closely followed by financial media worldwide.
As covered by Bloomberg, this political confrontation had a rapid and severe impact on Tesla’s market image and financial standing.
Impact on Tesla’s Share Price
Tesla stock tumbled from $331.93 to $284.70, its sharpest single-day decline since the company’s inception. According to CNBC, the trading volume spiked as institutional investors began pulling back. Analysts fear this could trigger a longer-term bearish trend unless confidence is restored Tesla share price.
Investor Sentiment: Panic or Opportunity?
The public fallout triggered record purchases of put options—over 4 million on June 5 alone. Market watchers believe this reflects a hedge against deeper losses. As per Reuters, institutional investors are preparing for a volatile summer for Tesla share price.
If you’re curious about Elon Musk’s broader influence on Tesla’s branding, check out our related article: Elon Musk’s Impact on Tesla’s Brand.
Effect on Elon Musk’s Net Worth
Due to the stock drop, Musk’s net worth fell by nearly $34 billion in a day, although he remains the richest man globally. This development illustrates just how tightly his wealth is tied to Tesla’s performance on Wall Street.
Where Does Tesla Go From Here?
Despite the chaos, Tesla still shows long-term promise. Analysts forecast that if relations stabilize and new EV product lines perform well, TSLA could rebound to $320+ levels within Q3 2025. However, political noise will remain a short-term risk factor.
Want to explore how EV companies perform under economic stress? Read our breakdown on The Future of Electric Vehicles in the Stock Market.
Conclusion
Tesla’s recent crash serves as a reminder that even high-performing tech stocks aren’t immune to politics. The Musk-Trump conflict has injected short-term volatility into Tesla’s outlook, but for long-term investors, it might also present a buying opportunity—provided the dust settles soon.
