Tesla shares experienced a notable increase after Politico reported that Elon Musk might leave his position at the Department of Government Efficiency. Sources familiar with his thinking told us last week that former President Donald Trump is very happy with what Elon Musk has done lately. In particular, Trump likes the DOGE initiative spending cuts.
According to The Verge, Musk and Trump have made a deal. Soon, Musk will go back to focusing on his other ventures, Tesla among them. Coming news could not come at a more critical time for the manufacturer of electric vehicles. Their stock has tanked more than 5% in the last month and fallen more than 31% since January 1st.
Tesla’s stock was in free-fall during the last few trading days, having lost as much as 6.4%. This decrease came on the heels of disappointing vehicle delivery results for Q1. Furthermore, shares experienced a stunning 36% drop during the first quarter of 2023, the biggest quarterly decrease since 2022. Following the report about Musk’s possible return to his business ventures, Tesla’s stock rose by 4%.
New York City Comptroller Brad Lander has pushed for the city to consider suing Tesla on behalf of NYC pension funds. Lander argues that Musk’s work for the White House is detrimental to Tesla’s operations and shareholder value.
“The basis of the potential litigation are the material misstatements from Tesla claiming that CEO Elon Musk spends significant time on the company and is highly active in its management, despite his helming the Trump Administration’s DOGE initiative, spending little of his time actually managing Tesla, and promoting policies that are actively harmful to Tesla’s business.” – Brad Lander
Musk’s involvement in governmental duties is one of several factors weighing on Tesla’s stock performance. His expanded influence should worry investors. Considering the increasing importance of Mexico and China to Tesla’s supply chain, it’s worth being concerned about his expanded influence. Trump’s automotive tariffs are becoming increasingly concerning for stakeholders, given their potential impact on Tesla’s supply chain.
With these obstacles on the table, the report urges that Musk be forced to get back to his primary business — making automobiles. This would provide long-overdue continuity and certainty to the agency. Tesla’s in some stormy seas at the moment. Investors are anxious to see what positive moves Musk will make that will turn around the stock fairly quickly.
“This is a very expensive job is what I’m saying.” – Elon Musk