Tesla shares are under pressure as Elon Musk's announcement of a new political party has investors worried about the company's future. The stock fell more than 7% on Monday.
On Saturday, the billionaire announced the founding of a new political party in the US, called the “America Party”. His goal is to “give freedom back to Americans”. As he wrote on the X platform, the creation of the party comes in response to the “will of the people”. He even cites a poll he conducted, according to which X users consider the founding of a new party necessary.
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Musk spoke about corruption, government waste, and one-party control of the country:
"When it comes to bankrupting our country with waste and corruption, we live in a one-party system, not a democracy. Today, the America Party is being formed to give you back your freedom," he wrote.
Musk's political involvement is "slowing down" Tesla
Tesla, with a valuation that remains close to $1 trillion, has seen its stock tumble sharply in recent times, not because of technological developments or production problems, but because of Elon Musk's political moves. First, it was his open support for Donald Trump and now his change of stance towards the US president and the announcement of the establishment of his own party. These situations have created an unstable environment, both for Tesla and for the rest of his business activities.
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According to analysts, Musk's involvement in politics raises fears that he will be distracted from Tesla issues, at a time when the company is facing increasing competition from China, demand problems, and the transition to new technological standards (such as AI and robo-taxi).
The establishment of the “America Party” was perceived by the market as a significant departure from business focus , which intensifies fears that Tesla — but also SpaceX and xAI — may suffer operational and communications consequences.
The reactions of analysts and Donald Trump
Musk's decision has sparked a backlashfrom politicians and investors alike. Wedbush Securities said it was a development that increased uncertainty about Tesla's strategic direction:
“For Musk to delve deeper into politics and try to ‘deal’ with the Washington establishment is the exact opposite of what the investment community expects at this critical juncture for Tesla,” he said. He also added that there is a general “exhaustion” among Tesla investors, who hope Musk will distance himself from the political scene.
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Even Donald Trump, a former political ally of Musk, expressed his strong opposition, calling his plans for a Party "ridiculous."
What this means for Tesla, shareholders and the market
Elon Musk's escalating political presence raises a number of concerns for Tesla and the broader tech market:
- Investors fear political retaliation from the government or regulators
- Musk's emphasis on politics may distract him from his role at Tesla
- Tesla's brand, already facing politically charged consumer backlash, risks becoming further polarized
Tesla's stock has fluctuated many times due to the personal activities of its CEO, but the founding of a party is one of the most extreme actions in recent times, according to analysts.
On the other hand, after the break with Trump, Elon Musk seems to be pursuing another position: he wants to become more than just a businessman who influences politics. He seems to be aiming to create a new center of power, of which he himself will be the head.
Source: www.theguardian.com
