The company’s decline is being driven by both falling demand for electric vehicles, leadership controversies, and a public row between Elon Musk and former U.S. President Donald Trump.

Tensions reached a breaking point when Musk, Tesla’s CEO, openly criticised Trump’s tax and spending agenda on X, the social media platform he owns. Trump retaliated on Truth Social, warning that federal contracts with Musk’s companies could be cancelled. 

That single threat sent Tesla shares down more than 14% on Thursday alone, the company’s worst one-day loss since 2020. Short sellers raked in an estimated $4 billion in profits from the collapse, according to Ortex data.

Tesla began the year ranked eighth globally by market capitalisation but has now fallen to tenth. The electric carmaker’s valuation has slumped to $917 billion, dragging it further down the leaderboard of global tech giants.

TD Cowen, a research firm, says the political fallout is creating fresh risks for Tesla’s U.S. sales. “35% of Tesla’s U.S. sales occur in Republican-leaning counties, 12% of which it classifies as ‘Deep Red.’ Of the 65% in Democratic areas, 36% are ‘Deep Blue.’” 

With Musk openly feuding with Republican leadership, analysts are concerned that political issues could hurt demand in key markets.

Meanwhile, Goldman Sachs has trimmed its price target for Tesla from $295 to $285, pointing to weakening deliveries across China, Europe, and the United States. The bank now expects Tesla to deliver just 365,000 vehicles in the second quarter, down from 410,000 and has maintained a ‘Neutral’ rating on the stock.

Some investors are still optimistic. TD Cowen kept a ‘Buy’ rating on Tesla, with a price target of $330, but warned that “Thursday’s events have created a higher degree of near-term uncertainty.”

The White House is reportedly attempting to calm the situation, with aides scheduling a call with Musk in a bid to ease political tensions. That news gave Tesla a brief lift on Friday, with shares rising up to 4% in pre-market trading.

Elsewhere in big tech, Apple has slipped from the top spot, falling to third place this year due to soft demand in China and renewed trade tensions. Its valuation has dropped more than 20%, landing at $2.99 trillion. Microsoft now leads the pack, driven by strong enterprise demand and adoption of its AI-powered tools.

Investor trust in Tesla has always been tied to Musk’s leadership, but that leadership has become more politically divisive and the market is reacting with caution and with retreat.

Trump, speaking to reporters aboard Air Force One, stated, “We’re dealing with four different groups, and a lot of people want it … all four are good.” He did not disclose the identities of the potential buyers but indicated that a deal could materialise soon.

The fate of TikTok has been undecided since a U.S. law, which took effect on January 19, mandated that its parent company, ByteDance, divest the platform over national security issues or face a ban. 

The legislation comes from fears that the Chinese government could leverage the app to gather data on American users or manipulate public opinion.

After assuming office for a second term on January 20, Trump signed an executive order delaying the enforcement of the law by 75 days, allowing more time for negotiations. However, TikTok briefly disappeared from app stores in the U.S. before service was restored following the delay.

Several high-profile entities have shown interest in acquiring TikTok’s U.S. operations. Among them is former Los Angeles Dodgers owner Frank McCourt, who has backed an initiative called The People’s Bid for TikTok through his Project Liberty venture. 

Other reported candidates include Microsoft, Oracle, and a consortium involving popular internet personality Jimmy Donaldson, known as MrBeast. Analysts estimate TikTok’s U.S. business could be valued at up to $50 billion, making it a highly sought-after asset.

Beyond the financial implications, the possible sale reveals a disturbing geopolitical tension between the U.S. and China, particularly in the space of technology and data security. 

The U.S. government has been investigating Chinese tech firms over issues related to data privacy and cybersecurity, with TikTok being one of the most high-profile targets.

However, TikTok and ByteDance have not publicly commented on the latest development.

This proposal, which follows months of anticipation surrounding TikTok’s operations in the U.S., aims to address national security issues while maintaining TikTok’s presence in the country.

The proposal suggests creating a new U.S.-based company that would combine Perplexity AI, TikTok’s U.S. operations, and contributions from additional investors. 

The U.S. government’s stake in the entity would materialise after an initial public offering (IPO) valued at no less than $300 million, according to details shared with investors and reported by The Associated Press. ByteDance, TikTok’s current Chinese owner, could retain a portion of its ownership under this structure.

The revised plan comes after feedback from the Trump administration, which points to TikTok’s data security and its ties to ByteDance. 

President Donald Trump has previously revealed his preference for a U.S. stakeholder to acquire TikTok and showed interest in the government receiving a significant ownership share. “I’d like to see the U.S. government get 50% ownership,” Trump said earlier this month, though it’s not yet certain whether he was referring to government ownership or the U.S. investor participation.

The merger plan places Perplexity AI, a growing company in the artificial intelligence space, to play a fundamental role in the future of TikTok. 

A source familiar with the deal noted that Perplexity’s pitch involves maintaining TikTok’s core video-sharing functionalities while ensuring stricter governance and compliance measures. ByteDance’s recommendation algorithm, however, is excluded from the deal, as it is considered a vital proprietary asset.

The financial framework for the merger includes funding from new capital providers, who would facilitate a one-time dividend payment to ByteDance’s existing investors and support the new company’s growth. 

Even with ByteDance’s public reluctance to sell TikTok’s U.S. operations outright, this proposed merger—rather than a sale—could make the deal more appealing to the Chinese company, sources say.

While the discussions are ongoing, other companies, including Oracle, Microsoft, and possibly Elon Musk, are reportedly exploring similar acquisition opportunities for TikTok. President Trump has promised a final decision on TikTok’s future in the U.S. within the next 30 days.

TikTok CEO Shou Zi Chew, in a recent video posted on the platform, was positive about resolving the situation: “I want to thank President Trump for his commitment to work with us to find a solution that keeps TikTok available in the United States.”

• Trump wins race to White House!
• Assets tied to “Trump trades” higher on election outcome
• Bitcoin surges over 8% to hit fresh all-time high
• USD dominates FX space, posts biggest 1-day gain since Feb 2023
• Fed decision on Thursday could trigger fresh market volatility

America has chosen Republican Donald Trump as its 47^th president following a tight race for the White House!

As of writing, Trump has secured 277 electoral votes with Republicans taking control of the Senate.  If the House comes under his control, this will be a “red sweep” scenario.

Assets tied to the “Trump trade” rallied during the Asian session after Trump took an early lead with his victory keeping bulls in the game. US futures are flashing green, Treasury yields have jumped while Bitcoin hit an all-time high.

Before election day, we thoroughly discussed a list of assets that could soar on a Trump win:

• US dollar: jumped 1.8% – its biggest 1-daygain since February 2023 on the prospects of slower rate cuts by the Federal Reserve.
• Bitcoin: rallied almost 10% to hit a fresh all-timehigh above $75,000 as crypto enthusiasts cheered a pro crypto president.
• S&P500 index: futures climbed 1.4%signalling that the S&P500 will open hitting fresh all-time highs. As mentioned in our week ahead report, the prospects of corporate tax cuts and a softer regulatory environment under Trump is good news for US equity bulls.

What does this mean for Nigeria?

Trump’s victory may pressure oil prices as he is seen pushing for a further increase in domestic oil and gas production, leading to increased supply in the long term.

In addition, his policies could see a boost in US growth – triggering inflationary pressures.

Should this prompt the Fed to keep interest rates higher for longer, a stronger dollar may drag oil prices lower as a result. This could be bad news for major oil producing countries who acquire most of their revenues from oil sales. For Nigeria, the combination of lower global oil prices and a stronger dollar could add to its woes as it navigates a rough period.

Here are assets that could be burned by Trump’s return to the White House:

• Gold: dropped as much as 1.5%thanks to a stronger dollar and rising Treasury yields. The prospect of slower Fed rate cuts could limit upside gains.
• Chinese stock indices: slipped this morning amid renewed fears over US-China trade tensions.
• European stock indices: flashed red due to concerns over the impacts of Trumps proposed tariffs on Europe.
• Currencies of major US trading partners: Euro (EUR), Chinese Yuan (CNH), and especially Mexican Peso (MXN) have all weakened against the USD.

The bigger picture…

Trump’s return to the White House will most likely set the market tone for the next few years with the USD, Bitcoin and other assets tied to the “Trump trade” the biggest winners.

Investors with some skin in the game have already experienced how markets reacted under Trump between 2017 – 2021.

Trump’s unpredictability, policy uncertainty and tariff wars with China left investors on edge. This and other major themes triggered sharp moves on the Vix index during his term. Market volatility jumped over 60% during Trump’s previous administration, from 2017 until 2020. Since then, volatility fell about 10% under President Biden.

What does this mean?

And Trump’s return to the White House is likely to trigger fresh levels of volatility across the globe.

• Trump’s proposed tariff increases in Europe and China could spark a global trade war.
• If this pushes up the prices for American consumers, a return of inflation may spell higher interest rates – boosting the USD.
• An appreciating USD could hit gold prices along with emerging market currencies.
• On the geopolitical front, Trump has already vowed to “stop wars”and swiftly end the war in Ukraine. Any major shifts in US foreign policy that escalate tensions could trigger risk-aversion.

By the way….

With the US election done and dusted, the next market-moving event could be Thursday’s Fed rate decision.

As discussed in our week ahead report, US interest rates are widely expected to be cut by 25 basis points in November. But the election outcome is likely to determine what action the Fed will take in December and beyond.

Traders are currently pricing in a 67% probability of another 25-basis point cut by December.

Given how Trump’s victory could lead to rising inflationary pressures down the road, this may prompt the Fed to keep interest rates higher for longer.

It will be wise to keep a close eye on the US dollar and gold which remain sensitive to US rate expectations.

• A less dovish than expected Fed may push the US dollar higher while pulling gold further away from its all-time high at $2790.
• If the Fed confirms that a December cut is still on the table, this may limit the USD’s upside while supporting gold prices.