Why Tesla Stock Is Soaring Today

Shares of Tesla (NASDAQ: TSLA) are rebounding on Wednesday. The electric vehicle maker's stock gained 5.1% as of 12:22 p.m. ET after falling as much as 6.4% earlier in the day. The recovery comes as the S&P 500 and Nasdaq Composite gained 0.5% and 0.9%, respectively.

A report suggesting CEO Elon Musk may soon leave his role in the Trump administration to refocus on his businesses has sparked investor optimism.

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Musk potentially exiting White House role

According to a Politico report released today, Elon Musk may soon depart his position at the Department of Government Efficiency (DOGE). The report indicates that while President Donald Trump says he is pleased with Musk and the spending cuts that have been implemented, the two decided in recent days that the billionaire would return to focusing on his businesses.

Musk's role at the helm of the new initiative and his involvement in politics both at home and around the world has made him an increasingly polarizing figure. It's also frustrated many Tesla investors who feel that he has neglected his duties as CEO given the requirements of running a government initiative at a time when Tesla is struggling.

He may even face legal troubles because of it. New York City Comptroller Brad Lander recently urged the city to sue Tesla on behalf of NYC pension funds, citing material misstatements from Tesla claiming that Musk "spends significant time on the company and is highly active in its management, despite his helming the Trump Administration's DOGE initiative."

Up and Down

Tesla's stock initially dropped today after the company released its quarterly delivery numbers that failed to meet already lowered expectations by a wide margin. The company has seen its sales plummet around the globe, likely due in part to Musk's presence in politics. Even if Musk returns to running Tesla full time -- or as full time as a person can who helms multiple massive businesses -- I continue to think that the stock is overvalued and built mostly on questionable claims about future revenue. I would avoid the stock.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.