‘Political Risk Premium’ Now Baked Into Tesla Stock Following Musk and Trump Clash

Tesla (TSLA) stock may have recovered some of yesterday’s losses following the crumbling of the bromance between chief executive Elon Musk and President Trump, but it won’t be able to accelerate away from politics as fast as it would like.

Toxic Tesla

Kathleen Brooks, research director at XTB, has warned that politics has become “toxic” for the Tesla share price, and that a “political risk premium” may now get baked into the stock.

Due to this, she said that it may be hard for Tesla’s stock to get back to the $350 highs from May. “Thursday’s decline was the largest single day fall in Tesla’s share price for at least 5 years,” she said. “The increased political risk premium will lead to a shakeup of the leadership within the Magnificent 7. Tesla had been leading Mag 7 since April, however, that has now changed with Nvidia and Meta now leading the group of mega cap tech stocks.”

Investor Battle Zone

Russ Mould, investment director at AJ Bell, said the Tesla board may already be thinking of moving Musk on given the very public fallout. He said Tesla shareholders were stuck in the middle of the battle zone as whatever happens to Musk from now on will act as a proxy for the company’s share price.

“If Musk cannot be restrained from stoking fires on the public stage, Tesla’s board might have to think long and hard about his future with the business,” he said.

Tesla’s share price which is down nearly 27% over the last six months has not just been battered by Musk’s political meanderings. It has also been hit by increased competition and concerns over the design of its fleet.

Trump’s lukewarm attitude to EVs in the form of subsidies and infrastructure support has been another drag.

Is TSLA a Good Stock to Buy Now?

On TipRanks, TSLA has a Hold consensus based on 16 Buy, 10 Hold and 11 Sell ratings. Its highest price target is $500. TSLA stock’s consensus price target is $284.37 implying a 6.37% downside.

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