Tesla (TSLA) shares are down more than 5% on Tuesday after President Donald Trump reiterated his threat to eliminate all subsidies to companies owned by CEO Elon Musk.
Without these subsidies, “Elon would have to close up shop and head back home to South Africa … and our Country would save a FORTUNE,” he wrote last night in a social media post.
Trump’s aggressive remarks arrive shortly after the billionaire took aim at his spending bill again. Including today’s decline, Tesla stock is down nearly 20% versus its recent three-month high.
Musk has already responded to Trump’s comment with a bold “I am literally saying CUT IT ALL. Now.,” statement on his social media platform X.
Nonetheless, the removal of federal subsidies could indeed result in a major blow to TSLA shares.
In fact, some estimates suggest the automaker’s annual profit could crater by more than $1 billion in that scenario, making its vehicles far less competitive in terms of price.
Additionally, a continued feud with the U.S. president raises regulatory risks as well, especially as the EV maker pushes into robotaxis and autonomous technology that require federal approvals.
Tesla stock is slipping on Tuesday because investors are concerned that Musk’s defiant response will escalate tensions – making sustainable growth an incremental challenge for the company.
In the wake of the Musk-Trump feud and expected weakness in Tesla’s Q2 deliveries, Barclays analyst Dan Levy recommends treading with caution on the EV stock.
Despite the company’s successful launch of robotaxi services last month, Levy believes weakness in its delivery numbers on Wednesday, July 2 could lead to a continued slump in TSLA stock.
Barclays maintained its “Hold” rating on Tesla shares this morning with the price target of $275, indicating potential downside of another 6% from current levels.
Wall Street at large recommends caution in buying Tesla stock here as well, given the consensus rating on it currently sits at “Hold” only.
Analysts have a mean target of $297 on TSLA – roughly in line with the price at which it’s trading at the time of writing.
