Tesla Share Price Plummets as Musk Launches New Political Movement

Shares in Tesla experienced a sharp decline following Elon Musk’s announcement of his new political venture, the America Party. The move has intensified tensions between the tech entrepreneur and President Trump, leaving investors increasingly concerned about the company’s leadership focus.

The electric vehicle manufacturer’s stock tumbled 6.8 per cent to $293.94 by Monday’s close in New York, making it the worst performer among the prestigious ‘Magnificent Seven’ tech companies this year. The decline represents a 35 per cent drop from its December peak, which coincided with Trump’s re-election victory.

Market sentiment has been further dampened by Tesla’s recent operational performance, with global deliveries declining 13.5 per cent in the second quarter, marking two consecutive quarters of falling sales. Short-sellers capitalised on the downturn, potentially securing paper profits of approximately $1.4 billion.

Wedbush Securities analyst Dan Ives, traditionally bullish on Tesla, noted widespread investor fatigue regarding Musk’s political endeavours. The mounting shareholder concerns have materialised in tangible business impacts, with Florida-based Azoria Partners postponing their Tesla exchange-traded fund launch directly citing Musk’s political aspirations.

The situation has been exacerbated by President Trump’s public criticism, who described Musk’s recent behaviour as becoming a “TRAIN WRECK” via his Truth Social platform. The deteriorating relationship between the former allies has added another layer of uncertainty for investors, who had hoped Musk would maintain a stronger focus on Tesla’s core business following his departure from the White House.

Consumer sentiment towards Tesla has notably shifted, with sales declining partially due to public reaction to Musk’s alignment with right-wing politics and his previous role in Trump’s Department of Government Efficiency. The mounting challenges suggest a critical juncture for both Tesla’s market position and Musk’s leadership strategy.