President Donald Trump said Starlink will remain at the White House and wished Elon Musk well despite their recent clash.

Tensions grew after public criticisms, with Trump suggesting Musk should call him to resolve the issue.

The dispute started over Musk’s criticism of Trump’s tax policies and was intensified by Musk deleting posts linking Trump to Jeffrey Epstein, which hurt Tesla’s stock.

Trump also denied claims about Musk’s alleged ketamine use and a physical altercation with Treasury Secretary Scott Bessent.

Trump acknowledged their past friendly ties, while Musk and his companies have not responded publicly.

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🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Government contracts create high-stakes relationships between CEOs and presidents

The Trump-Musk feud highlights the precarious position of CEOs whose businesses depend heavily on government funding.

Musk’s companies have received at least $38 billion in government support since 2003, including contracts and subsidies 1.

SpaceX alone relies on approximately $34 billion in NASA and military contracts for rocket projects, making it particularly vulnerable to political disruptions 1.

This interdependence creates significant business risk, as demonstrated by Tesla’s stock dropping 14% following Trump’s threats to terminate government contracts, wiping out about $150 billion in market value 2.

The situation highlights a broader challenge where business leaders must balance their personal political expressions against their fiduciary responsibilities, especially when companies are major government contractors.

2️⃣ Tesla stock demonstrates extreme vulnerability to “key person risk”

The market reaction to the Musk-Trump dispute provides a clear example of “key person risk,” where a company’s value becomes tightly linked to the actions of a single individual.

Following the public feud, analysts explicitly cited this risk when downgrading Tesla from “Buy” to “Neutral,” concerned about potential brand damage from Musk’s political activities 3.

This sensitivity is not new. Tesla’s stock has historically shown volatility based on Musk’s public statements, with market capitalization heavily tied to investor confidence in his leadership 4.

The $150-152 billion market value loss after Trump’s threats shows how quickly investor sentiment can shift based on perceived threats to Musk’s relationship with government stakeholders 5, 6.

The subsequent partial rebound demonstrates the complex relationship between Musk’s personal brand and Tesla’s valuation, as investors weigh the likelihood of actual policy consequences against the rhetoric of public disputes.

3️⃣ Space programs face unique vulnerability to political disputes

The Trump-Musk confrontation reveals how the U.S. space program has become dependent on private companies, creating potential national security concerns during political conflicts.

This incident highlights how deeply integrated SpaceX has become in national space infrastructure, with analysts noting that canceling these contracts would be extremely difficult given the government’s reliance on the company 7.

The U.S. military’s dependence on SpaceX for satellite launches creates a situation where political disputes could potentially disrupt essential defense capabilities, illustrating how public-private partnerships in critical infrastructure introduce new forms of systemic risk 1, 8.

This dynamic represents a significant shift from the earlier era of government-led space programs, where such operations were insulated from the personal conflicts of political and business figures.

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