Tesla after Trump

good morning. On Friday, May’s employment report was much better than feared. The private sector in the US added 139,000 jobs and held steady unemployment at 4.2%. There were soft spots that included downward revisions in March and April. But broadly speaking, this was a good report. The US stock market was approved and rose 1% on Friday. The Fed is set to hold the rates more consistently, despite the president’s demands. Email: Unedged@ft.com.

Tesla

Everyone saw it coming. When Donald Trump and Elon Musk signed the agreement ahead of the 2024 election, it was widely assumed that the partnership would be short-lived. However, this was even shorter than expected. And the division was a sight.

The sight cheered many of the Boost Tesla stocks he received from Mask, announcing he would retreat from government work and focus on business. Since the mask’s announcement in late April, Tesla has risen nearly 45%. On Thursday, during the mud throwing contest, stocks fell 14% and only returned a little on Friday. Interestingly, that fall will essentially flatten Tesla stocks since 2022. This is the chart.

Tesla is not in stock – how do you put this? – Many responses to fundamentals. It had already fallen in 2025, but even that fall could have underestimated the serious issues of the automaker. Sales in the US and overseas have plummeted as mask personal brands have turned off buyers and the company has lost its position in other EV manufacturers, particularly inexpensive Chinese competitors. Analysts have already steadily downgraded sales forecasts over the past three years, with a sharp decline in the end of this year and 2026.

Total profit margins are eroding as volumes decrease and are expected to remain low. And there were major obstacles to other parts of the business. The margin-type battery business is being destroyed by tariffs, but the Robotakshi Fleet is behind competitors like Waymo.

But it poses a big problem for us. What does last Thursday mean? What was the market’s way of thinking?

There are three (not mutually exclusive) theories. The first is that the market is responding to Trump’s big, beautiful bill provisions. The bearish JPMorgan Notes creating the round suggest that the bill could cut Tesla’s operating revenues by half. They estimate a $1.2 billion decline from the end of the consumer EV tax credit and a $1 billion hit from the end of the carbon tax credit. These suggestions have been published in books for a week or two, and don’t move the stock that much. Trump and Musk are no longer in good condition, and it appears unlikely that Musk will persuade Republicans to amend the bill.

The next possibility is that the premiums built into Tesla’s inventory are more than just the automotive business. Until last week, non-Tesla mask companies appeared to be getting boosts from his work in the federal government. XX debt sold well, and SpaceX and Starlink got a variety of perks. Tesla investors may have expected something similar to Tesla. Not now.

The last factor is partisan. TD Cowen has created a breakdown of Tesla’s US sales by political trends in each county. Since the Trump Mask partnership was launched, Red County sales have increased, with a larger total percentage, but sales have declined in blue.

TD Cowen’s Itay Michaeli and his colleagues should note that if all red counties reach the same level of EV penetration as Texas’ red counties, if they saw a big clash in the first quarter, there will be a 39% jump in EV sales this year (not just Tesla). But the masks today are on the bad side of Trump, and Republican enthusiasm for EVs – especially Tesla’s EVs – is waning.

There are various views on what will happen from here. Analyst estimates are mostly ticking, but there are more bullish ratings. Emmanuel Rosner of Wolfe Research argues that the hits from the budget bill may not be as serious as JPMorgan predicted. He divides it into:

a) TSLA’s US tariff rate is virtually zero, below its competitors. . . ~$2000-$6000+ range (create pricing umbrellas). b) We plan to launch a (management)-scale, affordable lineup (probably likely to connect). c) With medium-term federal and state emission standards relaxed, some automakers are less likely to “push” EVs into the market for compliance purposes (creating a better EV pricing environment).

And who knows where the relationship between the two billionaires is. Their love has come to hate them sooner than we could have imagined. But love and hatred are always on both sides of the same coin. Bromance could be rekindled.

(writer)

IPO Market

American exceptionalism has become questionable. It is said that global investors are opposed to dollar assets, or at least hedge them more carefully. Stock markets that have been dispatched in other parts of the world have moments. Its financial abundance puts us into question the Treasury’s position as an outstanding global safe asset. and so on. Unhedged is a bit skeptical of all this. Meanwhile, the speech is about revolution, and what is happening in the market seems to be viewed with caution.

The sustainability of US exceptionalism is not as clear as the IPO market. If a company needs to utilize the market for equity capital, it remains the US or bust.

Last week, FT reported on two foreign companies attempting to switch their major list to the US. The large Brazilian meat processor JBS, which shareholders have already approved the plan, and the UK Fintech Wise. They aren’t the only ones considering jumping. Korean fintech company Viva Republica and Chinese electric truck launch windrose are also picking us out.

Over the past decade, foreign companies have held a small share of US IPOs, as measured by transaction value. Foreigners’ stocks reached 36% in 2021, but that year is unusual due to large-scale holding contracts.

However, if you look at the number of transactions rather than the amount of dollars, the picture is different. Since 2023, overseas companies have accounted for more than 40% of all US IPO lists. So far, 60 non-US companies have listed IPOs in the US, accounting for 43% of the list and 12% of the total transaction value.

US companies are avoiding regulations and scrutiny and taking advantage of the easy availability of private funds to stay private longer. Volatility from Trump’s tariffs has made it difficult for businesses to list. Recently, both Klarna and StubHub had to pause their debuts.

However, foreign companies do not appear to be hampered by the US policy chaos. And there’s a good reason. Despite weaknesses in the US stock market and strong performance from global markets, the US rating remains high in relative terms. For example, the European Stoxx 600 trades at an average price/return rate of 17-26 for the S&P 500. From both regulatory and cultural perspectives, there will be fewer restrictions on enforcement wages in the United States. And the US offers high liquidity, a larger investor base that brings greater passive investment flows, and the reputation of being associated with the world’s biggest exchange. In these respects, other markets are really not competitive.

Janus Henderson’s Julian McManus believes growth is key:

It tends to mean more volatility, usually everything equal, and a higher equity risk premium and a lower valuation double. The United States has been able to escape that rule so far. This is the exceptional part. And the reason it was able to be an exception is that people expect high growth in the US and investors compensate for that higher volatility. What we haven’t seen yet is whether it is true or not.

American exceptionalism can deteriorate over the years. It hasn’t disappeared overnight.

(Kim)

One good read

Let’s eat.

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