Elon Musk silent after losing $34 billion in one day following public feud with Donald Trump
With Musk's very public accusation about Trump's personal life, the billionaire lost over $34 billion - one of the biggest single day losses
Shares in Elon Musk's electric vehicle company plummeted over 14 percent in a dramatic sell-off as investors offloaded their stake in the company as the CEO got into a heated clash with the U.S. President.
By yesterday's close, Musk's personal fortune had taken an estimated $34 billion hit—just short of the largest single-day wealth loss, which Musk also experienced in November 2021. Tesla's value also saw a staggering $150 billion wiped out.
Despite this massive loss, Musk still holds the title of the world's richest person, with an estimated net worth of $334.5 billion. In after-hours trading, Tesla shares saw a slight uptick, rising by 0.8 percent.
Investors poured hundreds of billions of dollars into Tesla stock following Trump's election, betting that political factors would outweigh profits. However, they were reminded once again on Thursday how risky such a gamble could be.
During a trip to the Middle East with Trump last month, Musk announced that Saudi Arabia had approved Starlink for aviation and maritime use. While it's unclear how much politics influenced these decisions, a series of recent deals in Bangladesh, Pakistan, India, and other countries have coincided with Trump's tariff threats and diplomatic efforts to appease the president.
Starlink, a subsidiary of SpaceX providing satellite internet services, also seems to have benefited from Musk's previously close ties with the president.
One indicator of SpaceX's triumph is its recent private financing round and share sale, which reportedly valued the company at a staggering $350 billion, a significant leap from last year's estimated worth of $210 billion. However, this success could be on shaky ground.
Initially, Tesla's stock benefited greatly from Musk's close ties with Trump.
Following the presidential election in November, investors flocked to Tesla, adding an impressive $450 billion to its value within a few weeks. The consensus was that Tesla would reap substantial benefits as Trump relaxed regulatory scrutiny of the company.
Investors were also banking on the new administration supporting Musk's vision of millions of autonomous vehicles cruising U.S. roads.
After reaching an all-time high on Dec. 17, Tesla's shares took a hit as Musk's role leading a government cost-cutting group resulted in boycotts and damage to Tesla's reputation. However, the shares have recently bounced back after Musk pledged to concentrate more on Tesla and its impending launch of driverless taxis.
Now, investor confidence seems to be wavering, resulting in substantial paper losses for Musk's personal holdings in Tesla stock.
The conflict began over the president's budget bill but quickly escalated. After Musk claimed that Trump wouldn't have won the election without his assistance, Trump insinuated that he might turn the federal government against Musk's businesses, including Tesla and SpaceX.
Trump's warning to terminate government contracts seems to be aimed more at SpaceX, another business venture of Musk's, rather than his automotive company. As a privately-owned rocket company, SpaceX has secured billions of dollars in funding for various projects with NASA, including transporting astronauts and cargo to the International Space Station, providing launch services, and developing a mega rocket to send astronauts to the moon by next year.
However, Trump claims that the disagreement is not centered around the contentious tax legislation, but rather stems from his decision to remove an "EV Mandate", which he communicated to Musk. Trump expressed his sentiments on Truth Social, stating: "I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do! ), and he just went CRAZY!".
Trump further emphasized on Truth Social that terminating Elon's government subsidies and contracts would be a straightforward way to save billions of dollars in the budget. He also expressed surprise that Biden hadn't taken this step already.
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In a bold response, Musk has declared his intention to retire the Dragon spacecraft, a crucial component for NASA's astronaut transportation to and from the International Space Station. Musk announced on social media: "In light of the President's statement about cancellation of my government contracts, @SpaceX will begin decommissioning its Dragon spacecraft immediately."
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