Musk's Declaration of War on Trump & Republicans is a Risk to Tesla

Unless this is part of a plan, Musk's threat to "fire" Republicans who vote for Trump's bill in next November's elections is suicidal.

• In a series of tweets yesterday, Musk not only called President Trump’s spending bill a “disgusting abomination” but also threatened to “fire” any Republicans who voted for it in next year’s congressional elections.

• Unless there’s a twist in this story, this is bearish for Tesla investors, who have bid up Tesla shares due to expectations that Musk could roll out robotaxis unhindered by regulations due to his proximity to Trump.

• Tesla’s stock still enjoys a “Trump premium”, as it’s up 37% since Trump’s election victory last November versus only a 3% rise in the S&P 500. This is despite a 41% drop in the Street’s 2025 EPS estimates (now at $1.93 versus $3.27 six months ago). It’s difficult to find any other stock in history that has performed this way.

• Valuations and returns for Tesla versus its top rivals are in Figure 7 below. It’s no surprise that Tesla is the most overvalued auto stock in the world and falls into the distressed categories in which Nissan and Stellantis find themselves.