Tesla Stock Slumps on Trump-Musk Feud: Buy the Dip in ETFs?

Core Viewpoint - The ongoing feud between President Trump and Tesla CEO Elon Musk has created uncertainty in the market, leading to a decline in Tesla's stock price and raising concerns about government support for Musk's companies [1][4][6]. Group 1: Conflict and Market Reaction - President Trump expressed disappointment in Musk for opposing his economic bill, which led to a public exchange of criticisms [2]. - The conflict has resulted in a 14.3% drop in Tesla shares on June 5, with a total market cap loss of nearly $200 billion since Musk's departure from 'DOGE' [6]. - Following the feud, Tesla shares gained 0.8% in after-hours trading, indicating some recovery potential [6]. Group 2: Government Support and Financial Implications - Trump suggested the possibility of revoking federal subsidies and contracts that benefit Musk's companies, including Tesla and SpaceX [4]. - Musk's companies have received significant government funding, with SpaceX alone receiving $3.8 billion in fiscal year 2024 and over $20 billion in contracts since 2008 [5][6]. - The Zacks Consensus Estimate for Tesla's earnings in the June quarter has decreased from 46 cents to 43 cents due to the recent conflict [11]. Group 3: Future Outlook and Strategic Initiatives - Concerns have been raised about Musk's political activities negatively impacting Tesla's sales, which reported the lowest sales in three years [7]. - Despite the challenges, Musk's focus on artificial intelligence and autonomous driving initiatives may provide a potential lifeline for Tesla [9]. - Tesla's average brokerage recommendation stands at 2.68, with 16 out of 42 analysts rating it as Strong Buy, indicating some level of confidence in the stock despite current challenges [10]. Group 4: ETF Performance and Investment Strategy - Tesla-heavy ETFs, such as TESL, NITE, TSLW, and XLY, have experienced declines, with TSLW slumping 17.3% on June 5 [12][13]. - Investors are advised to monitor government actions regarding support for Musk's companies before making investment decisions in Tesla or related ETFs [12].