A Maryland judge appointed by President Obama dealt a significant blow to President Donald Trump’s newly created Department of Government Efficiency, headed by Elon Musk.
Tesla
TSLA
-5.34%
investors have been following Musk’s DOGE activities since they appear to beturning offsome of the company’s core buyers—politically left-leaning people looking to go green.
Here are a few things investors should know about the ruling and what’s likely to come next.
What Was The Case?
Unnamed plaintiffs sued Elon Musk and DOGEover its dismantling of USAID. The plaintiffs were former USAID employees.
U.S. District Judge Theodore Chuang ruled that Musk can make DOGE act—effectively making him the head. That means Musk should have been nominated by the president and faced Senate confirmation. The White House argued that Musk is a Senior Advisor and Special Government Employee.
The judge also ruled DOGE actions exceeded the authorities of the executive branch and encroached upon those of the Legislative Branch.
🔸Is It a Big Deal?
Yes, it appears to be a big deal. Judge Chuang essentially ruled that Musk and DOGE had to stop doing what they were doing.
The suit deals with USAID, but it throws a wrench into how DOGE has been operating. The White House did not immediately respond to a request for comment.
🔸What Comes Next?
The White House could ask for a stay, letting DOGE continue to operate while the case moves through the courts. A stay isn’t likely, says Carl Tobias, Williams Chair in Law at the University of Richmond. He believes an appeal will come, but it would likely be 2026 before the Supreme Court hears the case.
That leaves the White House to modify DOGE activities. Perhaps Musk could face Senate confirmation.
DOGE could try to operate normally while the appeal process takes place, but that will leave plaintiffs back in judges’ chambers, asking for action.
🔸What Would Investors Like?
Investors would probably prefer that Musk head back to Austin, Texas, and focus on his car company.
Through Tuesday trading, Tesla stock was down 47% since the Jan. 20 inauguration. Weak early-year sales data from around the globe, along with protests at Tesla facilities, have investors wondering if Musk’s Washington pivot has permanently damaged Tesla’s brand.
“The word balance has been missing with Elon Musk and his ability to run Tesla as CEO. Instead [he’s] focusing all of his energy and time driving his DOGE initiative within the Trump administration,” wrote Wedbush analyst Dan Ives in a recent report. “There has been little to no sign of Musk at any Tesla factory or manufacturing facility the last two months, and perception has become reality for Tesla shares.”
Ives would like to see Musk more active at Tesla. He rates shares Buy and has a $550 price target for the stock, believing AI-trained self-driving cars and robots will unlock significant value.
It’s too early to tell how things will turn out, bur balance may coming back—thanks to a judge.
