Tesla, Inc. (TSLA) remains one of the most closely watched stocks on Wall Street, renowned for its innovation, volatility, and the outsized influence of its CEO, Elon Musk. In early June 2025, Tesla’s stock has been at the center of dramatic market movements, driven by a high-profile feud between Musk and U.S. President Donald Trump, as well as ongoing concerns about the company’s fundamentals and the broader electric vehicle (EV) market.
Recent Performance and Market Turbulence
Tesla’s stock price has experienced wild swings in the past week. On June 5, 2025, TSLA suffered its largest single-day loss in history, plunging 14.3% and erasing over $150 billion in market value. The stock closed at $284.70, extending its decline to 41% from its all-time high of $488.54 earlier in the year. This dramatic drop pushed Tesla’s market capitalization below the $1 trillion mark, a significant psychological and financial blow for the company and its investors.
The primary catalyst for this selloff was a very public and heated exchange between Elon Musk and President Trump. The dispute, which played out across social media platforms, centered on Musk’s vocal opposition to a major Republican tax and spending bill, which included provisions that could negatively impact EV incentives. Trump retaliated by threatening to revoke government contracts associated with Musk’s companies, further unnerving investors.
Investor Sentiment and Short Seller Profits
The Musk-Trump spat has rattled investor confidence. Many fear that Tesla could face operational headwinds if the political fallout results in lost government support or contracts, which are crucial for the company’s profitability and growth prospects. The episode also led to a windfall for short sellers, who made an estimated $4 billion in profit from their positions against Tesla on June 5 alone, making it one of the most lucrative short trades among the so-called “Magnificent 7” tech stocks this year.
Despite the turmoil, some analysts, such as Wedbush’s Dan Ives, believe the stock is oversold and that the Musk-Trump relationship is critical for both parties. Ives remains bullish on Tesla’s long-term prospects, especially in autonomous driving and artificial intelligence, which he values at $1 trillion alone.
Rebound and Recovery Efforts
On June 6, 2025, Tesla shares began to recover, rising by over 5% in pre-market and early trading as reports emerged that White House aides had arranged a call between Musk and President Trump to broker peace. This diplomatic effort helped restore some investor confidence, with the stock rebounding to around $300 per share, though it remains well below its previous highs.
The broader market also responded positively to signs of de-escalation, with Wall Street indexes edging higher on optimism over jobs data and the potential for a cooling of political tensions.
Broader Challenges: Valuation, Sales, and Competitive Pressures
Beyond the headline-grabbing feud, Tesla faces several structural challenges:
Valuation Concerns: Even after the recent selloff, Tesla trades at a price-to-earnings (P/E) ratio of over 170, a steep premium compared to other tech giants like Nvidia. This lofty valuation has led some experts to issue “red alerts,” warning that the stock could be vulnerable if growth does not accelerate or if margins come under pressure.
Sales Headwinds: Tesla is grappling with slowing sales growth, particularly in key international markets. Increased competition from both established automakers and new entrants in the EV space is squeezing market share and pressuring prices.
Regulatory Uncertainty: Proposed Senate legislation targeting California’s EV mandates could cost Tesla up to $1.2 billion in annual profit and $2 billion in regulatory credit sales, according to J.P. Morgan analysts. Any reduction in government incentives for EVs could further impact demand and profitability.
Brand and Political Risk: Musk’s shifting political alliances have alienated both Democratic and Republican consumers at different times, complicating Tesla’s brand positioning in a polarized market.
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Tesla’s Current Financial Snapshot (As of June 6, 2025)
| Metric | Value |
| Stock Price | $300.06 |
| Market Cap | $965 billion |
| 52-Week High | $488.54 |
| 52-Week Low | $167.41 |
| P/E Ratio | 170.49 |
| EPS | $1.76 |
| Shares Outstanding | 3.22 billion |
| CEO | Elon Musk |
| Employees | 125,665 |
Outlook: What’s Next for Tesla Stock?
The near-term outlook for Tesla is clouded by political uncertainty and macroeconomic headwinds. The resolution of the Musk-Trump feud could provide some relief, but the company must also address deeper issues such as slowing sales, high valuation, and regulatory risks. Tesla remains a member of the “Magnificent 7” group of elite tech stocks, but its drop to ninth in market cap rankings underscores the competitive and market challenges it faces.
Long-term, Tesla’s prospects hinge on its ability to maintain technological leadership in EVs, scale its energy business, and execute on ambitious projects like autonomous vehicles and robotics. Investors will closely watch the company’s next earnings announcement, scheduled for July 21, 2025, for further clues on its trajectory.
Final words
Tesla’s stock has always been volatile, but the events of June 2025 highlight how quickly sentiment can shift in response to political drama and market realities. While the company’s innovation and brand remain formidable, investors should brace for continued turbulence as Tesla navigates a complex landscape of policy, competition, and public perception.
