Tesla rebounds 5% after steep sell-off

Tesla shares rebounded rising over 5% to close at $295.14 after experiencing a sharp 14% decline the previous day due to a public feud between CEO Elon Musk and U.S. President Donald Trump. The conflict escalated when Musk criticized Trump's "One Big Beautiful Bill Act," which proposes ending the $7,500 electric vehicle tax incentive by the end of the year. In response, Trump suggested potential cuts to government contracts with Musk's companies, including SpaceX.

The fallout from the dispute initially erased more than $150 billion from Tesla's market value, marking the company's largest single-day drop. Short-sellers capitalized on the decline, earning nearly $4 billion, the second-largest single-day profit on record. The tensions raised concerns about potential regulatory hurdles for Tesla, particularly regarding the mass production of robotaxis, which would require approval from the U.S. Transportation Department.

However, the market reacted positively to signs of de-escalation, including reports that White House aides were scheduling a call to broker peace and Musk's indication on social media that he was open to easing tensions with Trump. Analysts believe that the stock's rebound reflects investor optimism that resolving the conflict could mitigate risks to Tesla's federal contracts and regulatory standing.

Despite the recent volatility, Tesla's stock remains a focal point for investors, with ongoing developments in the Musk-Trump relationship likely to influence future performance. The shares have seen a turbulent year, down nearly 30% overall, as they have faced challenges from soft sales and the impact of Musk's political stance on the brand.