Tesla’s stock took a significant hit in premarket trading on Monday, dropping 7.13% following CEO Elon Musk’s announcement of plans to establish a new political party. The proposed party, named the “America Party,” aims to focus on securing around two to three Senate seats and eight to ten House districts, which Musk believes would provide a swing vote on critical legislation reflecting the true will of the populace.
Musk’s pivot towards politics has raised eyebrows among investors, especially given his previous involvement in the Department of Government Efficiency and his close ties with former President Donald Trump. While this initially drew support, the relationship has since soured, with Trump recently labeling Musk’s new political ambitions as “ridiculous” and indicating that he believes Musk has strayed from constructive objectives.
Concerns surrounding Musk’s political engagement align with growing anxiety among Tesla investors, particularly in light of the company reporting a 14% year-on-year drop in car deliveries in the recent quarter, signaling missed expectations. The competitive landscape for Tesla is also tightening, particularly in key markets like China.
Dan Ives, a prominent analyst at Wedbush Securities, reflected the sentiment among investors, stating that Musk’s intensified political involvement runs counter to what stakeholders want during a pivotal moment for Tesla. While Musk continues to draw support from his loyal base, there is a palpable sense of fatigue from many investors regarding his political pursuits.
Overall, as Musk navigates this complex intersection of business and politics, the impact on Tesla’s market performance remains uncertain, with calls for a renewed focus on the company’s core business objectives becoming increasingly pronounced in light of these developments.