Featured News Headlines
- 1 Tesla Stock Decline Explained: Musk’s Political Shift
- 2 Analyst Warns of “Exhaustion” Among Tesla Investors
- 3 Stock Performance Reflects Investor Doubts
- 4 The Political Backdrop and Its Impact on Tesla
- 5 Musk’s Political Involvement Has Hurt Tesla’s Performance
- 6 Shareholders Still Back Musk, But Concerns Linger
Tesla Stock Decline Explained: Musk’s Political Shift
Tesla Stock Falls Amid Elon Musk’s Political Focus – Tesla’s stock took a sharp downturn in early Monday trading, falling almost 7% to around $294 in premarket hours. This extended the company’s year-to-date decline to 27%, sparking fresh worries among investors about CEO Elon Musk’s increasing focus on politics rather than Tesla’s core business.
The market reaction comes just days after Musk announced the launch of a new political entity, the America Party, a move that followed shortly after President Donald Trump signed the controversial Big Beautiful Bill into law. Trump fired back by accusing Musk of going “off the rails,” escalating tensions between the two.
Analyst Warns of “Exhaustion” Among Tesla Investors
Dan Ives, a prominent Tesla analyst from Wedbush and once one of Musk’s biggest supporters, expressed concern that Musk’s political ambitions are alienating Tesla shareholders.
“Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take during this crucial period for the Tesla story,” Ives said in a note published Sunday.
Investors had previously breathed a sigh of relief when Musk stepped back from his political role in the Trump Administration and the Department of Government Efficiency in May. This retreat was seen as a sign Musk would refocus on Tesla. However, that relief was short-lived after Musk’s recent announcement.
Stock Performance Reflects Investor Doubts
Tesla’s shares had peaked near $480 in December amid optimism that Musk’s ties with Trump would benefit the automaker. However, relations soured recently amid clashes over government spending, leading to concerns about future regulatory hurdles.
Ives warned, “Musk/Tesla do not need to keep poking the bear as Trump can create more hurdles for Musk/Tesla/SpaceX over the coming years.”
Tesla has not commented on these developments yet, leaving investors cautious.
The Political Backdrop and Its Impact on Tesla
Musk’s announcement of the America Party came through a post on X (formerly Twitter), stating: “Today, the America Party is formed to give you back your freedom.” Trump responded on Truth Social, criticizing Musk’s political ambitions and pointing out the historical failure of third parties in the U.S.
Trump also blamed Musk’s anger on the Big Beautiful Bill, which removed incentives for electric vehicles, a key market for Tesla.
Musk’s Political Involvement Has Hurt Tesla’s Performance
Over the past year, Musk’s political activities have coincided with several challenges for Tesla. The company has faced protests and boycotts, partly due to Musk’s association with the cryptocurrency Dogecoin (DOGE). More recently, ongoing conflicts between Musk and Trump have cast a shadow over Tesla’s outlook.
Last week, Tesla reported delivering about 384,000 electric vehicles in Q2, marking a 13.5% decline from the same quarter in 2024.
Despite the rocky period, many Tesla shareholders remain loyal to Musk’s leadership, doubting anyone else could effectively replace him as CEO.
Back in May, Tesla’s stock jumped 7% after Musk announced he was recommitting to work “24/7,” even sleeping at the office to focus on Tesla.
In June of last year, shareholders approved Musk’s controversial $55 billion compensation package, a sign of strong support despite some criticism. The package was viewed as a vote of confidence in Musk’s ability to steer Tesla toward future success.
Investors worried that rejecting the package could have led Musk to lose interest in Tesla and shift his focus entirely to other projects.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
