Morgan Stanley (NYSE: MS) analysts have suggested that the recent public spat between Tesla (NASDAQ: TSLA) CEO Elon Musk and President Donald Trump was likely a calculated move.
The clash began after Musk criticized Trump’s tax bill for inflating the federal deficit, triggering a 14% drop in Tesla shares and wiping out $150 billion in market value in a day.
In response, Trump threatened to cancel federal contracts with Musk’s companies, including SpaceX. Musk briefly considered decommissioning the Dragon spacecraft before walking back the idea.
Since then, the situation has cooled, and Tesla’s stock has rebounded. As of press time, TSLA was trading at $320.07, up nearly 4%.
Morgan Stanley bullish on TSLA stock
Despite the turmoil, Morgan Stanley remains bullish, reaffirming Tesla as its ‘top pick’ in the U.S. auto sector. The firm raised its price target to $410 from $400 and maintained an ‘Overweight’ rating while ruling out any long-term impact of the row between Musk and Trump.
“Likely [the feud] part of a planned strategy by Elon to achieve a specific goal with his approach designed to bring maximum public attention to the issue,” the bank said.
The banking giant pointed to Tesla’s leadership in physical artificial intelligence (AI), including autonomous vehicles, robotics, energy, and computing, stating, “We struggle to think of any other company as well positioned as Tesla.”
The feud, in which Musk claimed credit for Trump’s 2024 win, sparked concerns about brand perception and potential regulatory fallout.
Still, Morgan Stanley doesn’t see it as a long-term threat. The firm highlighted Tesla’s upcoming robotaxi launch in Austin on June 12 as a major catalyst.
Musk’s political involvement
The analysts noted that Musk’s political involvement is now deeply embedded in Tesla’s investment story. They warned that investors expecting him to focus solely on Tesla may ignore a consistent pattern.
While Musk’s views could stir negative sentiment, Morgan Stanley believes Tesla’s leadership is aware of these risks. The firm said his focus on U.S. fiscal issues now appears to be a strategic priority.
However, not all analysts share the bullish outlook. Finbold reported on June 9 that Baird’s Ben Kallo downgraded Tesla from ‘Outperform’ to ‘Neutral,’ setting a $320 price target and raising concerns about the aggressive timeline for the robotaxi rollout.
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