Shares of electric vehicle maker Tesla, which is headed by Elon Musk, slumped Tuesday as the war of words between the billionaire and President Donald Trump over the big bill of tax breaks and spending cuts heats up again, with Musk saying he may form a new political party.
Shares of Tesla have already tumbled more than 20 this year as worldwide sales of the company's vehicles erode amid a backlash against Musk and his association with the Trump administration , as well as stiffer competition. Tesla sales are plummeting in Europe and China as well. Tesla sales in China dropped 15 in May from a year earlier, according to the China Passenger Car Association, more than twice the decline from just the previous month.
Tesla's stock fell more than 5 in morning trading.
The resumption of hostilities between Trump and Musk, also the CEO of SpaceX, is always bad news for investors in Musk's companies.
"This BFF situation has now turned into a soap opera that remains an overhang on Tesla's stock with investors fearing that the Trump Administration will be more hawkish and show scrutiny around Musk related US government spending related to Tesla/SpaceX and most importantly the autonomous future with the regulatory environment key to the future of Robotaxis and Cybercabs," wrote Wedbush Securities analyst Dan Ives on Tuesday. "We would expect the stock to be weak to kick off trading this morning as the Street will show concern that the Trump and Musk once BFF relationship now backfires and turns into a junior high school friendship gone bad into an enemy."