Tesla shares experienced a significant drop at the start of the trading week in New York, following Elon Musk’s announcement of his new political party, named the ‘America Party’. This latest venture has raised concerns among investors, adding further pressure to Tesla’s stock performance. Tesla is an electric vehicle and clean energy company, known for its innovative automotive technology and sustainable energy solutions. The company also develops and manufactures energy storage systems, as well as solar and roofing products.
Musk outlined plans to target House and Senate seats over the next year, with a potential presidential candidate endorsement to follow. The news triggered an immediate market reaction, with Tesla’s stock initially plummeting by more than 7 per cent in morning trade. This decline resulted in a US$16.7 billion reduction in Musk’s net worth, according to the Bloomberg Billionaires Index. Although the stock pared losses to 6.6 per cent later in the day, the overall impact highlights investor apprehension.
Analysts suggest that Musk’s increasing involvement in politics is diverting attention from Tesla at a critical time. Jed Dorsheimer, an equity analyst at William Blair, downgraded Tesla, noting that investors are growing weary of the distraction. The stock has already declined by more than 20 per cent this year, indicating that Musk’s political activities may be negatively affecting Tesla’s brand and appeal to car buyers.
Despite the announcement, details about the ‘America Party’ remain scarce, and no official paperwork has been filed with the US Federal Election Commission. Musk’s growing role as a major political spender, alongside his responsibilities leading multiple companies, raises questions about his capacity to effectively manage his diverse business interests.
