🚨 Stock Drop: Tesla's stock dropped by 6% following President Trump's call to review government subsidies received by Elon Musk’s companies, including Tesla and SpaceX.
🗣️ Trump’s Remarks: Trump tweeted that Musk might be receiving more subsidies than any person in history. He suggested that without these financial aids, Musk’s companies, including Tesla and SpaceX, could be forced to shut down. Trump proposed that the Department of Government Efficiency (DOGE) should investigate these subsidies, claiming the country could save a "FORTUNE."
📜 Background: The comments came after Musk voiced his displeasure with a new tax-cut and spending bill, which Trump and the White House are pushing to pass by July 4th. Musk criticized the bill, calling it “insane and destructive,” and vowed to challenge lawmakers who supported it, especially those who campaigned on limiting government spending.
📉 Market Impact: The market reacted negatively, with Tesla's stock dropping 6% after Trump's post. Over the last five days, the stock has tumbled around 13%. This added volatility is linked to concerns that Trump’s administration could impose tighter scrutiny on Musk’s companies, especially in the fields of government contracts and regulations around autonomous vehicles.
💸 Musk’s Business Interests: Musk’s companies, including SpaceX (which holds $22bn in federal contracts) and Tesla, have been significantly supported by federal funds. However, the new tax bill proposes cuts to electric vehicle (EV) tax credits, which may hurt Tesla's profits.
🔴 Conflict of Interest Concerns: Musk has faced criticism for his role in DOGE, particularly over alleged conflicts of interest. Reports have shown that Musk may have influenced cuts to regulatory agencies that were investigating his companies, such as the National Highway Traffic Safety Administration and the FDA.
📉 Broader Market Impact: The broader market has also felt the sting, with the Nasdaq down by 1% and the S&P 500 dropping 0.3%. However, the Dow Jones Industrial Average rose by 0.6%.
🔮 What’s Next?: The tension between Trump and Musk continues to brew, with both parties battling over the future of government spending, subsidies, and the national debt. The outcome of this clash could significantly impact not just Tesla but Musk's entire business empire.
📊 Key Takeaways:
Tesla stock down by 6%.
Trump pushes for subsidy review of Musk’s companies.
Musk criticizes tax bill, calling it destructive.
Market nervous about potential government scrutiny.
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