Tesla Inc (NASDAQ:TSLA) shares surged more than 5.5% on Friday as investors welcomed signs of a possible détente between CEO Elon Musk and President Donald Trump following a volatile day of public sparring that had raised concerns over future regulatory risks.
Wedbush analyst Dan Ives acknowledged the drama surrounding the pair’s recent falling-out, calling it “one of the strangest Twilight Zone days we have seen” in years of covering Musk, but stressed the market reaction had gone too far.
“The social media and war of words back and forth is not good for anyone and put massive pressure on Tesla shares with fears that Trump will turn from friend to foe,” Ives wrote, warning that an adversarial stance could lead to a “tough regulatory environment for Musk in the Beltway.”
Still, Ives pointed to a potential thaw in tensions, citing media reports that the White House had scheduled a call between the two men aimed at mending ties. “Musk needs Trump and Trump needs Musk for many reasons and these two becoming friends again will be a huge relief for Tesla shares,” he said.
Despite Thursday’s selloff, Ives reiterated his bullish stance, saying the political dust-up doesn’t alter Wedbush’s long-term view. “We believe Tesla shares are way oversold on this news as this spat between Trump and Musk does not change our firmly bullish view of the autonomous future looking ahead that we value at $1 trillion alone for Tesla,” the note said.
Tesla's stock drop earlier in the week came amid concerns that a breakdown in the once-friendly relationship between Musk and Trump could reignite regulatory scrutiny, particularly if Trump regains political power. Friday’s rebound suggests investors are regaining confidence that the high-stakes feud may be short-lived.