The sharp drop in Tesla Inc (NASDAQ:TSLA) shares, which saw the electric vehicle maker lose around $152 billion in market value, has sparked concern for those with exposure to major tech companies.
The decline, triggered by a no-holds-barred public row between Elon Musk and Donald Trump, sent ripples far beyond Wall Street.
As Tesla shares tumbled 14.2% by the market close, the impact was felt in portfolios holding stakes in high-growth US firms.
The scale of the loss is comparable to the market capitalisation of Unilever PLC (LSE:ULVR), the UK’s fourth-largest company, underlining the global reach of the fallout.
The slump followed a day of social media exchanges between Musk and Trump, who traded accusations and policy threats.
Trump suggested he could withdraw government backing for Musk’s companies, while Musk fired back with criticism of Trump’s policies and past conduct.
Although Musk later clarified that SpaceX would maintain its NASA commitments, the damage to Tesla’s stock was already done.
The situation adds to existing pressures around Tesla. The company has been underperforming due to cooling demand and growing discomfort around Musk’s political activity.
For those holding funds or trusts with sizeable Tesla allocations, such as those focused on innovation and tech growth, for example, Scottish Mortgage Investment Trust PLC (LSE:SMT), which was down 1% early on, the consequences are immediate.
It’s not just direct holdings that are affected. Broader funds with exposure to US technology stocks, particularly those tracking major indices or specialising in disruptive sectors, may also register losses.
With Tesla’s valuation now down to approximately $892 billion and Musk’s personal fortune reduced by just under $9 billion, questions are being raised about the future trajectory of a company that has long been seen as a bellwether for tech optimism.
The timing of the fallout, tied to US political manoeuvres including the elimination of electric vehicle tax credits, adds a layer of uncertainty.
For those with international exposure, the unfolding situation serves as a reminder of the volatility that can arise when political and business interests collide.