A high-profile feud between President Donald Trump and billionaire Elon Musk reached a fever pitch on Thursday, triggering a $150 billion-plus wipeout in Tesla (TSLA) shares.
The selloff came after Musk slammed Trump’s GOP-backed spending bill, prompting fiery responses from the president and raising concerns over the political risk now tied to one of the world’s most valuable companies.
“This is a disaster of epic proportion for Tesla and SpaceX,” Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management CEO, told Yahoo Finance in reaction to the developments. “And whether Elon wants to accept it or not, he did help Trump get elected. It is his fault that Trump is president of the United States.”
Although shares rebounded on Friday, rising around 6% in mid-afternoon trading as Musk and Trump moved to cool tensions, Gerber warned, “I think we’re just getting started for the declines because a lot of the stock price’s value isn’t based off the underlying business. It’s based off the perception that Elon being a part of Tesla is somehow wonderful.”
The close relationship between Trump and Musk began to take a more active shape during last year’s campaign trail. Musk endorsed the then-Republican candidate soon after the assassination attempt on Trump in Butler, Pennsylvania. Afterward, Musk frequently appeared at rallies, voicing his support for the Republican Party at large and pledging millions to America PAC, a Trump-aligned super PAC.
Once Trump was elected, the president appointed Musk as head of the newly formed Department of Government Efficiency, otherwise known as DOGE. The purpose of the agency was to eliminate government waste. Musk officially exited the role late last month, revealing the agency had cut billions of dollars in costs.
But just a few days later, Musk’s tone shifted as he criticized Trump’s controversial tax legislation, which is estimated to add trillions to the national debt over the next decade. It would also eliminate EV tax credits, a crucial government incentive for Tesla and a potential “death blow” to the company’s sales, according to Gerber. Having cleared the House, the bill now heads to the Senate, with Trump vowing to sign it into law by July 4.
Read more here and check out the timeline below documenting the week that was: