What Happened?
Shares of electric vehicle pioneer Tesla (NASDAQ: TSLA) jumped 3.5% in the afternoon session after tension between CEO Elon Musk and President Donald Trump continued to cool off. This de-escalation is likely a major relief for investors who had been worried about the potential negative impacts on Tesla's business, particularly regarding government contracts or regulatory scrutiny.
Also, there is growing optimism about Tesla's launch of its robotaxi service. Reports suggest a possible launch date as early as June 12th in Austin, Texas. This highly anticipated launch is seen as a crucial new revenue stream and a significant step forward for Tesla's autonomous driving ambitions, which could help offset challenges in its core EV sales.
After the initial pop the shares cooled down to $317.22, up 2.8% from previous close.
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What The Market Is Telling Us
Tesla’s shares are extremely volatile and have had 134 moves greater than 2.5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock dropped 4.9% as momentum slowed after a 40% rally that followed the Q1 2025 selloff, suggesting that the recent surge may have exhausted short-term buying interest.
It is also possible some investors were taking profits amid uncertainty as they wait for more concrete updates on Tesla's highly anticipated product updates scheduled for later this year. These updates are critical for improving Tesla's growth story, as reported sales in Europe and China were weak in the first quarter of the year.
Contributing to the pullback, a widely circulated Bloomberg report resurfaced concerns about the safety of Tesla's driver-assistance technology, highlighting a fatal 2023 crash. The timing of the story is especially sensitive, as Tesla prepares to unveil its AI-powered robo-taxi service in Austin later in the month, a launch that risked being overshadowed by renewed scrutiny and could shake investor confidence in the company's autonomous driving ambitions.
Adding to the wall of worry is Elon Musk increasingly looking like an enemy to President Trump rather than a confidant. President Trump has shown the willingness to punish companies that do not fall in line with his agenda and vision.
Tesla is down 16.4% since the beginning of the year, and at $317.22 per share, it is trading 33.9% below its 52-week high of $479.86 from December 2024. Investors who bought $1,000 worth of Tesla’s shares 5 years ago would now be looking at an investment worth $4,642.
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