Tesla stock rose 3% in early Tuesday, offering some relief for investors after shares dived in response to additional tension between CEO Elon Musk and President Donald Trump.
Investors are growing weary of political drama. One Tesla bull believes it's time for the Tesla board to take action to help alleviate the situation.
The move comes despite a small price-target cut from Mizuho analyst Vijay Rakesh. He took his target to $375 from $390 while keeping a Buy rating on the stock.
Tesla shares fell 6.8% on Monday after Musk, while criticizing government spending, announced over the weekend he was forming a new political party, the America Party, after running a poll of his followers on X. Trump responded on Truth Social saying, "I am saddened to watch Elon Musk go completely off the rails, essentially becoming a TRAIN WRECK over the past five weeks."
Five weeks stretch back to early June, when a social media feud broke out between the two men. Round one of the spat sent Tesla shares below $285 before things cooled off. Musk tweeted on June 11 that he regretted some of his X posts about the president.
The apology, and the easing of tensions, let investors focus on Tesla's June 22 robo-taxi service launch in Austin, Texas, and the company's report on vehicle deliveries in the second quarter, released on July 2.
The robo-taxi launch was limited to a handful of handpicked riders, but the fact remains that Tesla is managing to ferry people around Austin without anyone in the driver's seat. As for deliveries, Tesla sold some 384,000 cars in the second quarter, in line with Wall Street's reduced estimates and better than investors feared.
Tesla reports second-quarter earnings on July 23. Investors will want updates about robo-taxis, sales, new EV models, and politics.
On politics, Wedbush analyst Dan Ives is hoping for some assistance from the board of directors. "This is a tipping point in the Tesla story, and ultimately, the Tesla Board needs to act now and set the ground rules for Musk going forward around his political ambitions and actions," wrote Ives on Tuesday. The Trump-Musk "soap opera must end."
He recommends that the board design a new compensation package for Musk that would give him 25% voting control, up from about 20% today, including Musk's stock options. In return, Musk would agree to run the company through at least the end of the decade, spend a required amount of time at Tesla, and establish ground rules for his political activities.
Ives' comments show that even bulls on the stock have limited patience with distractions for the CEO. He rates Tesla stock at Buy and has a Street-high price target of $500 a share, according to FactSet. Ives believes artificial-intelligence applications, such as self-driving cars, will unlock a new wave of earnings growth for the company.
Coming into Tuesday trading, Tesla stock was about 27% year to date and up about 17% over the past 12 months. Shares were down about 15% from early June, just before Trump and Musk started publicly feuding, and up about 17% since the Nov. 5 presidential election.