Markets Stunned as Trump and Musk Go to War, Wiping Out $151 Billion in Tesla Value—Here’s What Happens Next
Tesla shares plunge 14% as Trump-Musk feud heats up, fueling fears over federal contracts and market chaos. Investors brace for impact.
| Quick Facts |
|---|
| Tesla stock dropped 14.3% in a day |
| $151 billion in market value erased |
| SpaceX has secured nearly $20B in US government contracts since 2008 |
It’s a Silicon Valley soap opera for the ages—and Tesla investors just paid the price. On Thursday, Tesla shares went into free fall, ripping through Wall Street as an escalating power struggle between CEO Elon Musk and former President Donald Trump burst into the open.
By mid-morning, Tesla’s stock tumbled as much as 18%, the steepest dive in nearly five years, before clawing back slightly to close down a brutal 14.3%. The hit erased a stunning $151 billion from Tesla’s market cap in a single day. Even after trading hours, the losses kept mounting, with nervous investors watching for more fireworks.
What Sparked the Sell-Off?
The chaos erupted when Trump blasted Musk on his Truth Social platform, proposing the US could save “Billions and Billions” by yanking government contracts from Musk’s companies—most notably Tesla and SpaceX. Trump’s explosive suggestion came after Musk torched the latest tax and spending bill, calling it a “disgusting abomination,” as Congress eyes final approval before Independence Day.
The tension stems from the bill’s massive scope—the Congressional Budget Office predicts it would spike federal deficits by $2.4 trillion over the coming decade.
How Important Are Federal Contracts to Musk’s Empire?
Federal contracts are a massive lifeline for Musk’s ventures. SpaceX alone has banked nearly $20 billion in government deals since 2008, fueling its domination in the space race and allowing it to support ambitious projects like Starlink. If Trump’s threat to cut ties became reality, the impact could ripple across the tech and automotive sectors.
You can explore more on government contracts and budget debates at USA.gov and track developments on CNBC.
Why Are Investors Freaking Out?
Wall Street analysts say the feud signals deeper risks for Tesla. If political headwinds turn against Musk, critical government support could evaporate. Tech analyst Dan Ives compared it to a “knife fight” between the two billionaires. The public brawl has shaken investor confidence, raising questions about Tesla’s long-term stability at a time of increasing electric-vehicle competition.
Q&A: Could Tesla (or SpaceX) Really Lose Federal Contracts?
Q: Has anything like this happened before?
A: Rarely. Government contracts are typically stable, but political rifts at this level are almost unprecedented.
Q: How vulnerable are Musk’s companies if contracts are pulled?
A: While Tesla depends less on federal money, SpaceX’s future missions rely on NASA and Department of Defense deals. Losing them would be a seismic blow.
Q: What’s the likely outcome?
A: For now, it’s saber-rattling. But the public feud adds uncertainty, which Wall Street hates.
How Can Investors React to the Tesla Stock Shock?
– Watch for further statements from Congress, the White House, and related agencies.
– Diversify portfolios—avoid heavy reliance on a single tech giant.
– Monitor government contract news at sources like Reuters and NASA.
– Stay alert to policy and regulatory changes affecting the EV and space sectors.
Could a New Political Party Shift Power in 2025?
Musk didn’t blink, responding by floating the creation of a new centrist party in the US—fueling speculation about further political disruptions as 2025 approaches. As partisanship intensifies, both business and political landscapes may change dramatically.
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Don’t let market shocks catch you off guard:
Investor Action Checklist:
– Track official statements from Tesla, SpaceX, and Washington
– Review your tech stock portfolio for vulnerabilities
– Follow budget and contract discussions on trusted news sites
– Consider hedging strategies for high-risk stocks
– Stay informed on political shifts—leadership can move markets!
For the latest in market moves and political drama, keep checking Google News and stay one step ahead.
