2 Stocks To Avoid With Musk Out Of Trump's Favor

A public feud between Elon Musk and President Trump has created uncertainty for Tesla (TSLA) and the Destiny Tech 100 ETF (DYYZ), with Trump threatening to cut funding to SpaceX and Musk criticizing Trump's tax bill, which proposes unfavorable changes to EV incentives. Specifically, the bill could eliminate EV tax credits, add registration taxes, and repeal clean energy tax credit provisions, potentially impacting Tesla's profitability and EV sales, while the ETF is heavily invested in SpaceX, making it vulnerable to funding cuts. Given the volatility and potential headwinds, analysts suggest caution regarding TSLA and DYYZ until the situation stabilizes.

Analysis

A high-profile public dispute between Elon Musk and President Trump has introduced significant uncertainty and risk for Tesla (TSLA) and the Destiny Tech 100 ETF (DYYZ), reflected in a "strongly negative" overall sentiment score (-0.75) and a "warning, cautious" tone from market signals. The core of the risk stems from President Trump's threats to curtail funding for SpaceX and his advancement of a proposed tax bill, the "One Big Beautiful Bill Act," which Elon Musk publicly opposes. This legislation contains several provisions potentially detrimental to Tesla's financial health and market position: the phase-out of the $7,500 new EV and $4,000 used EV tax credits; the imposition of a new annual registration tax of $250 on EVs; the cancellation of Zero-Emissions Vehicle (ZEV) program provisions, from which Tesla currently earns approximately $2 billion annually through the sale of tax credits; and the repeal of Section 30C tax credits for charging infrastructure alongside Inflation Reduction Act (IRA) subsidies for battery production and clean energy infrastructure, impacting products like Powerwall and Megapack. These legislative threats compound existing pressures on Tesla, including reported plummeting sales in Europe attributed to Musk's political activities, increased competition in China where automakers like BYD have surpassed Tesla's EV market share, and unfavorable stock chart technicals, with TSLA shares facing resistance at the 200-day moving average and exhibiting a weakening MACD. For the Destiny Tech 100 ETF (DYYZ), significant risk arises from its substantial asset concentration, with over 54% invested in SpaceX, making the fund highly susceptible to Trump's threats against SpaceX's reported $15 billion in federal contracts. DYYZ is further characterized by high price volatility, a considerable 2.5% management fee, negative technical momentum evidenced by a recent break of multi-week support and an eroding MACD, and a potential diminishing appeal if the IPO market revives.

Key Decisions for Investors

• Investors should exercise significant caution with Tesla (TSLA) and Destiny Tech 100 ETF (DYYZ) holdings due to the heightened political and legislative uncertainties, awaiting greater clarity on the proposed tax bill and its potential impact on EV incentives and SpaceX funding.
• Closely monitor legislative developments concerning the "One Big Beautiful Bill Act," as its specific provisions regarding EV tax credits, registration fees, ZEV program credits, and IRA subsidies could materially alter Tesla's profitability and growth trajectory.
• Given DYYZ's high concentration in SpaceX, its inherent volatility, a 2.5% management fee, and the direct threats to SpaceX's federal contracts, investors might consider reducing exposure or refraining from new positions until the political risk landscape improves.
• For TSLA, the combination of potential adverse legislative changes, ongoing market challenges in Europe and China, and negative short-term technical indicators suggests a defensive stance, pending either a favorable resolution of the tax bill or a significant positive operational catalyst like a successful RoboTaxi rollout.