Tesla’s stock took a sharp dive in premarket trading on Monday, dropping over 7% after CEO Elon Musk announced his intention to form a new political party called the “America Party.” Musk’s latest foray into politics has clearly rattled investors, who fear it will distract him during a critical time for the electric car maker.
This isn’t the first time Musk’s political activities have raised concerns among shareholders. His previous involvement with President Donald Trump’s administration was a point of contention, and many saw his exit as a positive for the company’s brand. Now, his plan to re-enter the political arena has renewed those concerns.
Wedbush Securities analyst Dan Ives captured the mood perfectly, stating that investors are feeling a “broader sense of exhaustion” with Musk’s political ventures. He noted this is the “exact opposite direction” shareholders want him to take, especially as Tesla faces significant business challenges.
The move has also drawn sharp criticism from President Trump, who called the idea “ridiculous” and said Musk has “gone completely off the rails.” This public feud adds another layer of drama.
The timing could not be worse for Tesla. The company is already grappling with a 14% year-on-year decline in vehicle deliveries and intense competition, particularly in China. For investors, another political sideshow is the last thing the company needs right now.
