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Tesla (TSLA-3.33%) investors exhaled Friday. After a brutal selloff that shaved more than $150 billion off the EV-maker’s market cap in a single day, Tesla shares bounced back almost 6% in mid-morning trading — a modest but much-needed reprieve after what one analyst called “one of the strangest Twilight Zone days” in recent memory.
“We have seen some very strange and wild days in covering Musk for many years but yesterday might win the award and prize for one of the strangest,” Wedbush analysts led by Dan Ives said in a note.
The chaos began Thursday when a high-profile spat between Elon Musk and President Donald Trump — once political allies and, at one point, near-constant communicators — spilled into public view. Musk torched Trump’s signature “One Big Beautiful Bill,” slammed his economic policies, backed calls for his impeachment, and even alleged ties between the president and the Epstein files. Trump returned fire on Truth Social, calling Musk “CRAZY” and suggesting his administration might pull “BILLIONS AND BILLIONS” of federal contracts from Musk’s companies.
The market reaction was swift and punishing. Tesla stock fell 14% on Thursday alone — and was down as much as 20% in the five days before Friday as Musk ramped up his criticism of the president’s signature domestic policy bill. Short sellers made a killing in Thursday trading.
On Friday, though, cooler heads on Wall Street seemed to win out — or at least the money did. Ives said the stock had been “way oversold” in a “frenemy firestorm” that, while dramatic, doesn’t change Tesla’s long-term trajectory.
“We believe this spat between Trump and Musk does not change our firmly bullish view of the autonomous future looking ahead that we value at $1 trillion alone for Tesla,” Ives wrote.
Investors, it seems, are betting (for now) that the détente holds — or at least that that the political drama doesn’t derail Tesla’s fundamentals. Even with Friday’s rebound, Tesla remains down over 12% on the week and almost 21% year-to-date.
According to ABC News (DIS-1.33%), the White House tried to schedule a call between Trump and Musk as early as Friday morning, though Trump downplayed any plans, saying Musk was the one who wanted to talk — and that Trump was “not particularly” interested. The president’s chief of staff, Susie Wiles, told NBC that “there are no plans” for such a call on Friday.
Meanwhile, Musk appeared to soften his tone on X, responding “true” to a post from hedge fund manager Bill Ackman urging the two men to “make peace for the benefit of our great country. We are much stronger together than apart.”
Ives wrote that Wedbush believes “cooler heads will prevail,” with “hopes [that] these good friends can makeup and start to resolve their differences.” Still, when two of the world’s most unpredictable figures are involved, volatility might be the only thing that’s predictable.
“The social media and war of words back and forth is not good for anyone and put massive pressure on Tesla shares with fears that Trump will turn from friend to foe and create a tough regulatory environment for Musk in the Beltway,” Ives wrote. “Musk needs Trump and Trump needs Musk for many reasons and these two becoming friends again will be a huge relief for Tesla shares.”