Tesla Shares Start the Week with a 10% Gain: End of the Decline?

Monday was a good day for Tesla (TSLA): the stock shot up by over 10% and thus ended a brutal losing streak of nine weeks. According to CNBC data, it was the absolute standout in the S&P 500 that day. But let’s not cheer too hard – even with this jump, Tesla is still 44% below its peak in December 2024. What’s driving this rally, and is this a real recovery or a fleeting rebound? Let’s dissect the chaos.

From boycotts to arson: Musk’s political price

In recent months, Tesla has taken quite a beating on the stock market. The culprit? Elon Musk’s outspoken support for far-right policies, which unleashed a storm of negativity. Consumers in the US and Europe decided to boycott the brand en masse – from cancelled orders to vandalism and even arson at showrooms and charging stations. Sentiment plummeted, and the share price followed. On Friday, Morgan Stanley added fuel to the fire by lowering their Q1 delivery forecast – a drop of 9% year-on-year – and pointed directly at Musk’s political moves as the culprit. They reported:

“Falling demand, negative brand image, and increased competition.”

But Musk didn’t back down. On Thursday evening, he rallied his team during a meeting: “Hold on to your shares!” He claimed that the Model Y will still be “the best-selling car in the world” in 2025, despite signals from analysts that production and demand are collapsing.

Trump’s tariffs: An unexpected lifeline?

Monday’s rally didn’t just come from Tesla’s own kitchen. Wall Street got a shot of optimism from Washington. The Wall Street Journal and Bloomberg reported that Trump’s dreaded reciprocal tariffs, scheduled for April 2, could turn out to be less blunt than expected. Industrial sectors – like cars – could possibly escape the first blow, and some countries might even get a free pass. Trump confirmed this later that day: “Tariffs on cars and pharmaceuticals are coming, but not in the first round.” This gave investors breathing room after weeks of trade war anxiety.

The markets took it. The Dow rose 429 points (1%), the S&P 500 climbed 1.4%, and the Nasdaq gained 1.9%. Tesla led the tech charge, but Meta and Nvidia also rode along with about 3% profit. “The fear around tariffs is diminishing,” said Charlie Ripley of Allianz Investment Management. “A targeted approach instead of a blunt axe can prevent an economic meltdown.” For Tesla, which is already under pressure, this was a welcome lifeline.

A daylight, no sunshine

Yet this is not a major victory. Tesla’s jump follows a small plus on Friday, when Trump already hinted at “flexibility” in his tariff plans. That broke the S&P 500’s fourth weekly dip, with a narrow win. But zoom out: the index is still 7.8% below its record, and the Nasdaq 12% below its peak. Traders have been holding their breath for weeks due to recession warnings – weak consumer confidence in early March even pushed the S&P into correction territory (10%+ drop). Monday was a relief, but not yet a turnaround.

Trump remains a wildcard. He promised on Monday that new tariffs will “soon” hit cars, wood, and chips. For Tesla, which builds its cars in the US but sells worldwide, this could be a mixed bag: competitors with imports will take hits, but export markets like Europe could retaliate. And then there’s Musk’s baggage – those boycotts and arsons won’t just go away. All in all, yesterday felt good, but today could be different again. Keep a close eye on those charts and headlines.