Musk and Trump: a dispute with billions in consequences
The conflict between Elon Musk and Donald Trump not only has political dimensions, but also massive financial implications. Musk, the CEO of Tesla $TSLA (+6,14%)was forced to back down after a public spat with Trump, when Tesla's market capitalization fell by an impressive 153 billion dollars. The dispute began when Musk publicly criticized Trump, particularly over his tax policies that could negatively affect Tesla and other electric car manufacturers. Despite attempts to de-escalate, Trump remained adamant and threatened to withdraw government contracts. The two giants once seemed to be allies, but tensions escalated when Musk called Trump a 'disgusting abomination'. This led to a dramatic fall in Tesla shares, which dropped 14% on Thursday. Musk, who lost 34 billion dollars in assets as a result of the dispute, was forced to rethink his aggressive rhetoric and listen to advice from his followers to defuse the situation. The financial consequences of the dispute are significant, not only for Musk, but also for the wider stock markets, as Tesla plays a significant role in the major indices.
Tesla shares plummet due to political tensions
The dispute between Musk and Trump has had a major impact on the markets. Tesla shares fell sharply on Thursday, dragging other indices with them. The shares lost around 14%, resulting in a drop of around 150 billion dollars in market capitalization. The impact was also felt on the major indices such as the S&P 500 and the Nasdaq 100, both of which were weighed down by Tesla's decline. Tesla accounts for around 1.6% of the S&P 500 and therefore has a significant impact on it. Although Tesla shares rose slightly on Friday, the decline since mid-December remains worrying. Tesla has lost about 37% of its value since then, while the S&P 500 is down only 1%. This trend highlights the risks associated with owning stocks in indices that are heavily dependent on a small number of large companies. Musk and Trump not only have their personal differences, but also shed light on the fragile relationship between politics and business, which has a direct impact on the financial markets.
Sources:
https://finance.yahoo.com/news/musk-blinks-first-bitter-trump-120149604.html
https://finance.yahoo.com/news/trump-musk-induced-tesla-slide-180808651.html