Does Musk-Trump spat blow a hole in Tesla bull case?
An ugly, name-calling, chest-thumping public brawl on Twitter between the richest guy in the world and the most powerful guy in the world – it's what the platform was made for, says the writer.
Image: Allison Robbert / AFP
I spoke almost a year ago to Mark Spiegel of Stanphyl Capital in New York. He said it was just a matter of time before Musk and Trump fell out – the only question was who would shaft who first, but his view was that sooner or later everyone 'gets Musked'.
An ugly, name-calling, chest-thumping public brawl on Twitter between the richest guy in the world and the most powerful guy in the world – it's what the platform was made for. It's also whacked Tesla stock as bulls need to reassess their upside case for the carmaker.
Both probably realise that this is doing each of them a lot of harm – Musk could lose billions of dollars in government contracts and tax credits, while Trump could see his 'big beautiful bill' fail to pass.
They are going to cool off a bit and talk things over. But in the words of Anchorman, boy, that escalated quickly! Selling in Tesla was HEAVY, with $153bn wiped out in one day. There is a whole cluster of related items here - we saw the likes of Palantir also hit hard, down almost 8%. Tesla, though, is coming back in pre-market trade. BTD is ever present. To summarise where we are - Musk has been criticising the tax and spending bill all week, which prompted Trump to talk about his disappointment with his 'former' ally.
Musk then went full tweetstorm and launched a series of attacks on X, suggesting that Trump appears in unreleased files related to Jeffrey Epstein. Trump shot back, saying Musk "went CRAZY" and was asked to leave the administration, while he also threatened to cut government contracts with Musk's companies. Tesla's stock price dropped 14%.
Clearly this introduces new risks for TSLA – the argument that Musk's closeness to Trump was bullish for the stock because Trump always promotes his favourites is kinda becoming unstuck. For instance, the assumption was it would mean an easier path for the rollout of robotaxis or some other favourable policy decision - that is now very much in doubt. Enmity with Trump changes the regulatory environment.
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Advertisement
Next
Stay
Close ✕
But, I guess, TACO...? I dunno...EV subsidies were always on the chopping block, but I guess Musk thought his 'influence' at court would help..I guess he found out he'd been labouring under a misapprehension.
Anyway, look at it like this – the tax bill will cut Tesla's EV subsidy, probably negatively impact profits by $1.2bn a year...plus there is a $2bn hit coming from California legislation...which explains why Musk is such a critic.
The tax bill has much broader ramifications than EV credits and Tesla shares, though, so the question is whether this intervention is going to derail the legislation. If it does, then it's probably GOOD for Tesla. But then Trump has many other levers of vindictiveness to pull – he's already mentioned pulling government contracts for things like SpaceX or Starlink.
And then you have to chuck in elements like drones...which MS's Adam Jonas says could turn TSLA into a defence stock... I guess TSLA won't be getting any Pentagon contracts soon ...but either way, the bulls will keep grasping and throwing new reasons to buy.
Does it blow a hole in the bull case? I never bought into the Tesla bull case in the first case - to me it just reaffirms what I already knew. Let's not forget trade!
Before this Trump-Musk spat S&P 500 e-mini futures touched 6,016, the highest since late February, as reports that Trump had held a phone call with China's Xi Jinping. Trump said he has had a "very good" phone call amid their ongoing trade war, during which they agreed to more tariff talks.
Meanwhile, markets are braced for today's nonfarm payrolls report from the US. It's expected at 130,000 in May, down from the 177,000 increase recorded in April, with the unemployment rate sticking at 4.2%. Wall Street fell yesterday as Tesla dragged the broader tech sector down, with the Nasdaq Composite down 0.83% and the Nasdaq 100 off 0.8%. The S&P 500 fell half a percent, while the Dow was 0.25% lower.
European stock markets were mixed in muted early trade on Friday, with investors looking over their shoulders at trade wars and the economic data in the US, which is going to be important for sentiment. Ultimately, really bad economic data may be coming, but it could spur the Fed into action. Yesterday we had US jobless claims up, labour costs up, productivity down...the data is cracking.
Broadcom was down 4% after it forecast modest revenue for the current quarter, hinting AI spending isn't as strong as expected. Sales will be around $15.8 billion, with more AI chip deployment next year. Stock fell 4% in extended trading.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
IOL News
an hour ago
- IOL News
US travel advisory reveals 'bigger issues at play' in diplomatic ties
US President Donald Trump uses an image taken in Congo as proof of his claims that there is a genocide against Afrikaner farmers in South Africa. Image: AFP The United States government has revised its travel advisory to South Africa after President Cyril Ramaphosa met with Donald Trump at the White House, raising concerns that these may be further attempts to paint the country as a no-go zone. This latest level 2 travel advisory warning its citizens to be cautious when visiting the country, issued on May 27, comes hot on the heels of Ramaphosa's recent visit to Washington where he and his delegation pleaded with Trump to reconsider some of his recent views about a white genocide in South Africa. The advisory urges American citizens to exercise increased caution in South Africa due to crime, terrorism, civil unrest, and kidnapping. 'Violent crime is common and includes robbery, rape, carjacking and mugging. There are also "smash-and-grab" attacks on vehicles. Violent crime is more common in the downtown areas of big cities, especially after dark. "Kidnapping is a threat in South Africa. Kidnappers target US citizens and other foreign travelers to steal money. Captors often force victims to withdraw cash or give online account passwords before they are let go. Though rare, some kidnappings involve demanding ransom from families," it said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ The Department of State also warns about the risk of terrorist violence and urges US Mission staff use fully armoured vehicles. International relations expert Dr Noluthando Phungula said the US was trying to vilify South Africa as part of a bigger issue. The reality is that there are numerous issues that have caused strain, including the Israel-Palestine conflict, BRICS expansion and perceived alignment with Russia and these differences may be well be among the reasons behind Washington's lashing out against Pretoria. "We cannot deny crime remains a major challenge for the country, but the US is capitalising on this defect in painting SA as a no-go zone. Crime in this country remains a huge challenge which is closely tied to the stark inequalities. This reality continues to fuel the negative perceptions of the country," Phungula said.. South Africa has been added to the list alongside Namibia, Botswana, Belgium, Greenland, Denmark, and Germany. Level 2 indicates moderate risk, unlike Level 4 'Do Not Travel' advisories issued for countries such as Sudan and the DRC. The latest advisory comes more than a year after the US State Department issued another updated Level 2 travel advisory to South Africa in February 2024 in which it warned its citizens to exercise increased caution in the country due to crime and civil unrest. Responding to the alert, Minister of Tourism, Patricia De Lille indicated that context is important as South Africa remains one of the most safe and stable countries in the world. "We respect the sovereign right of all nations to provide guidance to their citizens travelling abroad. We also acknowledge the recent meeting between Presidents Ramaphosa and Trump and the subsequent media coverage that has followed. However, it is important to offer broader context and reaffirm our unwavering commitment to ensuring the safety, comfort, and enjoyment of all visitors to our country. Furthermore, the advisory states that there is risk of terrorist violence, including terrorist attacks and other activity, in South Africa. "Due to the risks, U.S. government employees working in South Africa must obtain special authorisation to travel to many informal settlements (townships) in and around Cape Town. U.S. mission staff must use fully armoured vehicles when visiting and visiting hours are limited to 10am to 3pm," it states.
Eyewitness News
2 hours ago
- Eyewitness News
Trump sends military force to LA over immigration protests
LOS ANGELES - US President Donald Trump ordered National Guard troops to Los Angeles, a rare deployment expected Sunday against the state governor's wishes after sometimes-violent protests against immigration enforcement raids. Trump took federal control of California's state military to push soldiers into the country's second-biggest city, a decision deemed "purposefully inflammatory" by California Governor Gavin Newsom and of a kind not seen for decades according to US media. The development came after two days of confrontations during which federal agents fired flash-bang grenades and tear gas toward crowds angry at the arrests of dozens of migrants in a city with a large Latino population. "It's up to us to stand up for our people," said a Los Angeles resident whose parents are immigrants, declining to give her name. "Whether we get hurt, whether they gas us, whatever they're throwing at us. They're never going to stop us. All we have left is our voice," she told AFP as emergency services lights flashed in the distance. An AFP photographer saw fires and fireworks light up the streets during clashes, while a protester holding a Mexican flag stood in front of a burnt-out car that had been sprayed with a slogan against the Immigration and Customs Enforcement (ICE) agency. "President Trump has signed a Presidential Memorandum deploying 2,000 National Guardsmen to address the lawlessness that has been allowed to fester," White House Press Secretary Karoline Leavitt said, blaming what she called California's "feckless" Democratic leaders. "The Trump Administration has a zero tolerance policy for criminal behavior and violence, especially when that violence is aimed at law enforcement officers trying to do their jobs." Trump congratulated the National Guard for "a job well done" shortly before midnight on Saturday in a post on Truth Social. However, Los Angeles Mayor Karen Bass said on social media platform X the troops had not yet been deployed, while AFP journalists have so far not seen them on the ground. Trump took a swipe at Bass and Newsom, saying in his post they were "unable to handle the task," drawing a comparison with deadly fires that hit the city in January. 'Purposefully inflammatory' The National Guard -- a reserve military -- is frequently used in natural disasters, such as in the aftermath of the LA fires, and occasionally in instances of civil unrest, but almost always with the consent of local politicians. California's governor objected to the president's decision, saying it was "purposefully inflammatory and will only escalate tensions." Federal authorities "want a spectacle. Don't give them one. Never use violence. Speak out peacefully," Newsom said on X. Trump's Defense Secretary Pete Hegseth threatened to involve nearby regular military forces. "If violence continues, active duty Marines at Camp Pendleton will also be mobilized -- they are on high alert," he wrote on social media. Law professor Jessica Levinson said Hegseth's intervention appeared symbolic because of the general legal restriction on the use of the US military as a domestic policing force in the absence of an insurrection. "The National Guard will be able to do (no) more than provide logistical (and) personnel support," she said. Arrests Trump has delivered on a promise to crack down hard on the entry and presence of undocumented migrants -- who he has likened to "monsters" and "animals" -- since taking office in January. The Department for Homeland Security said ICE operations in Los Angeles this week had resulted in the arrest of "118 aliens, including five gang members." Saturday's standoff took place in the suburb of Paramount, where demonstrators converged on a reported federal facility that the local mayor said was being used as a staging post by agents. Masked and armed immigration agents carried out high-profile workplace raids in separate parts of Los Angeles on Friday, attracting angry crowds and setting off hours-long standoffs. Fernando Delgado, a 24-year-old resident, said the raids were "injustices" and those detained were "human beings just like any." "We're Spanish, we help the community, we help by doing the labor that people don't want to do," he told AFP. Mayor Bass acknowledged that some city residents were "feeling fear" following the federal immigration enforcement actions. "Everyone has the right to peacefully protest, but let me be clear: violence and destruction are unacceptable, and those responsible will be held accountable," she said on X. FBI Deputy Director Dan Bongino said multiple arrests had been made following Friday's clashes. "Law and order will prevail," he said on X.
The Star
3 hours ago
- The Star
EFF's Julius Malema is ‘quietly' singing ‘Hallelujah hosanna' over Trump-Musk fallout
EFF leader Julius Malema is 'quietly enjoying' the dramatic fallout between US President Donald Trump and billionaire Elon Musk, the two figures who have long criticised him over his outspoken rhetoric, radical political views, including the controversial "Kill the Boer" chant. The two had previously accused Malema of inciting violence against white farmers. The red berets have denounced the claim. The latest split between the former allies who were once bound by political interests appears to align with Malema's long-standing opposition to both. Trump, in a televised Oval Office tirade, said he was "very disappointed" in Musk after the tech billionaire criticised his spending bill. Musk fired back on X (formerly Twitter), accusing Trump of ingratitude, claiming credit for his 2024 win, and even referencing unverified claims linking Trump to Jeffrey Epstein. The feud has political and economic fallout. Tesla shares dropped, Musk threatened to withdraw from a major US space programme, and Trump also hinted at pulling Musk's government contracts. The clash comes amid rising tensions between the US and South Africa. Tensions between the two countries have intensified since Trump's second term. Last month, during a high-level meeting with President Cyril Ramaphosa and the Trump administration in Washington, aimed at mending diplomatic relations between the two countries, Malema took centre stage. Trump played clips of Malema singing the 'Kill the boer' chant, which he argued incites violence against white farmers, but the red berets rubbished the claim. Trump called for Malema's arrest and denounced South Africa's land reform as 'land seizure.' IOL News previously reported that Malema has vowed to continue singing the controversial song despite strong criticism from Trump. The US also cut HIV/AIDS funding and granted refugee status to 49 white South Africans, claiming racial discrimination, which Pretoria has vehemently rejected. With Musk born in South Africa and now publicly clashing with Trump, Malema 'may' see this as more than political theatre, which is possibly a moment of vindication. Speaking with IOL News, Professor Theo Neethling, from the University of Free State's Department of Political Studies and Governance, said the fallout between Trump and Musk was 'long predictable.' 'The Trump-Musk fallout was long predictable, and even if the EFF delights in it, the fact remains that the United States conducts diplomatic relations with the South African government, not with the EFF…,' he said. 'The EFF is a relatively small party, as President Ramaphosa pointed out to Trump, and it is not relevant in South Africa's international relations.' Neethling emphasised that diplomatic relations are maintained between the US government and South African government, not with political outliers. 'The Trump administration also conducts its relations with the South African government, and what carries much more weight in the US than Elon Musk are the views and roles of top Republican voices like JD Vance, Marco Rubio and Ted Cruz. They will be decisive in the future US-South Africa relations.' Commenting on the developments of Trump and Musk clashing, Neethling said Malema will continue 'loudly in his rhetoric of African self-reliance,' but South Africa's Government of National Unity (GNU) understands the importance of maintaining relations with the US, which is the largest economy in the world. 'Around 600 American companies invest and do business here in South Africa and contribute to job creation,' he told IOL News. 'The Minister of Finance (Enoch Godongwana) also rightly pointed out recently that if the US does not want to do business with a country, it places that country on the periphery of international trade and investment.' According to Neethling, the Trump and Musk fallout will have no impact on future US and South Africa relations. 'Again, top Republican voices like JD Vance, Marco Rubio, and Ted Cruz are what matter, as well as those of senior officials in the White House.' Meanwhile, independent political analyst Goodenough Mashego also expressed his views on the Trump and Musk fallout, adding that Malema is probably 'enjoying' seeing the two clash. 'I think Julius Malema is really enjoying, is really reveling at what is happening because it absorbs him in a way to say, look, two liars are now fighting. You know, they say, do not disturb. Napoleon Bonaparte once said, don't disturb your enemy when he's making a mistake.' Mashego said he believes that Malema is currently not in any mood to disturb what he called 'enemies' as they make mistakes. 'I hope he doesn't tweet. I hope he just watches the show. He just enjoys reading Elon Musk and Donald Trump's Truth Social tweets. So that, you know, I think it's a marvel…' He added, 'think EFF, I think Julius Malema, he now knows that the person who's been whispering into Donald Trump's eye is no longer in the picture, which means the rhetoric from the part of the White House towards him is going to be limited because Trump doesn't have an original opinion.' 'All that he's saying is a megaphone. He's just saying what other people want him to say. So I think this is really the end of the Que de Bois charade that Donald Trump used to stage. And it's the end of that whole obsession by Donald Trump with Elon Musk, because going forward, with the Que de Bois, because going forward, whatever Elon Musk says relating to South Africa, I think one of the people is going to really try to ridicule it will be Donald Trump.' 'So they have two fools, two buffoons, really ridiculing each other,' Mashego added. He described the fallout between Trump and Trump as a Christmas for the EFF. 'Well, I don't think it really gives Malema a chance to push his message of self-reliance because self-reliance needs not be pushed through rhetoric. It needs to be pushed through doing.' IOL News has sent questions to the EFF, requesting their input on the latest development between Trump and Musk, and will be updated once received. [email protected] IOL Politics
