Tesla shares have tumbled after CEO Elon Musk announced plans to launch a new US political party amid his ongoing feud with his longtime ally, United States President Donald Trump.
Shares of the electric automaker are down 7 percent as of 12pm in New York (16:00 GMT) on Monday. Musk announced his plans on Friday to launch a new political party after disagreements with the president over the tax legislation signed into law the same day. Trump has called the idea “ridiculous”.
Musk’s announcement has fuelled further concerns amongst analysts about his dedication to the automaker after it reported a sales decline in the second quarter driven by Musk’s political involvement.
Trump-Musk conflict weighs on investors
“Very simply, 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,” Dan Ives, analyst at Wedbush Securities, said in a note. “While the core Musk supporters will back Musk at every turn no matter what, there is a broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track.”
“After leaving the Trump Administration and DOGE [the US Department of Government Efficiency], there was initial relief from Tesla shareholders and big supporters of the name that Tesla just got back its biggest asset, Musk. That relief lasted a very short time and now has taken a turn for the worse with this latest announcement.”
