TLDR
- Tesla shares rebounded 5% in premarket trading Friday after CEO Elon Musk signaled openness to easing tensions with President Trump
- The public feud between Musk and Trump wiped $150 billion from Tesla’s market value in one day Thursday
- Short-sellers made nearly $4 billion profit from Tesla’s 14% drop, the second-biggest single-day gain on record
- Tesla is now the worst-performing large-cap stock in 2025, down 29.3% year-to-date with $380 billion in market cap losses
- White House aides are reportedly scheduling a call between Musk and Trump to help broker peace
Tesla shares staged a recovery Friday morning after one of the most brutal single-day losses in the company’s history. The electric vehicle maker’s stock rose 5% in premarket trading as tensions between CEO Elon Musk and President Donald Trump appeared to soften.
The rebound came after Musk posted on X that he was open to easing the conflict. He agreed with hedge fund manager Bill Ackman’s calls for a detente between the two powerful figures.
JUST IN: Elon Musk agrees that he and President Trump should “make peace” for the benefit of the country in a reply to Bill Ackman.
Bill Ackman may have just done it again. pic.twitter.com/6Q9wUHubTL
— Collin Rugg (@CollinRugg) June 6, 2025
White House aides were reportedly working to schedule a call between Musk and Trump. The move suggests both sides want to cool the heated exchange that rocked markets Thursday.
The war of words erupted after Musk criticized Trump’s tax and spending bill. The legislation proposes ending the popular $7,500 electric vehicle tax incentive by late 2025.
Trump fired back by threatening to cut government contracts with Musk’s companies. That includes rocket maker SpaceX, which relies heavily on federal contracts.
TRUMP on Truth Social suggests cutting MUSK’s federal contracts his businesses like SpaceX have w/ the government.
Tesla, Musk’s EV company, has long received federal subsidies. pic.twitter.com/o5yisVEEXd
— Miranda Nazzaro (@mirandanazzaro) June 5, 2025
The public spat cost Tesla dearly. The stock plunged 14% Thursday, erasing more than $150 billion in market value in a single session.
Short-sellers capitalized on the chaos. Investors betting against Tesla pocketed nearly $4 billion from the drop, according to Ortex data.
This marked the second-biggest single-day profit for Tesla short-sellers on record. The massive windfall shows just how violent the stock’s move was.
Tesla’s 2025 Struggles
Tesla now holds the unwelcome title of worst-performing large-cap stock in 2025. The company’s market value has fallen 29.3% this year to $917 billion.
The $380 billion wipeout represents the biggest loss among major companies worldwide. Tesla has dropped from eighth to tenth place in global market capitalization rankings.
The company faces multiple headwinds beyond the Musk-Trump drama. Electric vehicle demand has softened across the industry.
Musk’s political controversies have also weighed on the stock. His ties to far-right groups have sparked brand concerns among some consumers.
Tesla trades at 120 times expected earnings despite the recent decline. That premium valuation leaves little room for error compared to other automakers.
Regulatory Risks Loom
An open clash with Trump could create serious problems for Tesla’s future plans. The Transportation Department regulates vehicle design standards that Tesla needs for its robotaxi ambitions.
Tesla wants to mass-produce self-driving cars without pedals and steering wheels. Federal approval will be crucial for those plans to succeed.
The company’s stock has been volatile since Musk backed Trump’s presidential campaign last July. Shares initially surged on hopes of lighter regulation for autonomous vehicles.
But the gains faded as Tesla’s sales softened and Musk’s political stance created brand issues. The Trump feud adds another layer of uncertainty.
Tesla shareholder Matthew Britzman called the situation concerning but potentially temporary. “If cooler heads prevail and the tension eases, that would definitely be a big improvement for Tesla,” said the Hargreaves Lansdown analyst.
Some market observers expect the rift to blow over quickly. City Index analyst Fiona Cincotta called Trump’s threats unlikely to materialize into real action.
Tesla shares closed Thursday at their lowest level since the election. The stock remains down nearly 30% for the year despite Friday’s premarket gains.
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