Investors dump Tesla as Trump-Musk clash escalates
In three hours on Thursday, they learned yet again how dangerous that gamble could be.
Shares of Elon Musk's electric vehicle maker plunged more than 14 per cent in a stunning wipeout as investors dumped holdings amid a bitter war of words between the president and the world's richest man.
By the end of the trading day, $US150 billion ($A230 billion) of Tesla's value had been erased, more than what it would take to buy all the shares of Starbucks and hundreds of other big publicly traded US companies.
The disagreement started over the president's budget bill, then quickly turned nasty. After Musk said that Trump wouldn't haven't gotten elected without his help, Trump implied that he may turn the federal government against his companies, including Tesla and SpaceX.
"The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's Governmental Subsidies and Contracts," Trump wrote on his social messaging service Truth Social.
"I was always surprised that Biden didn't do it!"
Trump's threat to cut government contracts seems targeted more to another of Musk's businesses, SpaceX, than his car company. The privately held rocket company has received billions of dollars for sending astronauts and cargo to the International Space Station, providing launches and doing other work for NASA. The company is currently racing to develop a mega rocket for the space agency to send astronauts to moon in 2026.
After the presidential election in November, investors rushed into the stock, adding more than $US450 billion ($A691 billion) to its value in a few weeks. The belief was that the company would see big riches as Trump eased regulatory oversight of Tesla. They also were betting that the new administration would embrace Musk's plans for millions of cars on US roads without drivers behind the wheel.
After hitting an all-time high on December 17, the shares retreated as Musk's time as head of a government cost-cutting group led to boycotts and a hit to Tesla's reputation. They've recently popped higher again after Musk vowed to focus more on Tesla and its upcoming driverless taxi launch.
Now investors aren't so sure, a worry that has translated into big paper losses in Tesla stock held by Musk personally — down $US20 billion ($A31 billion) for the day.
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