Tesla shares fall 7% after Musk announces America Party
What's the story
Tesla's shares fell by as much as 7% in pre-market trading on Monday. The decline comes after CEO Elon Musk announced the formation of a new political party over the weekend. The "America Party" was proposed after a majority of respondents on X (formerly Twitter) supported the idea.
Market reaction
'Tesla needs Musk as CEO'
Musk's political ambitions have raised concerns among investors, leading to a drop in Tesla's stock. Veteran tech analyst Dan Ives of Wedbush noted that Musk is Tesla's "biggest asset," but his foray into politics could put the company's shares under pressure. "Tesla needs Musk as CEO and its biggest asset and not heading down the political route yet again...while at the same time getting on Trump's bad side," Ives said in a note on Sunday.
Party goals
Musk gone completely off the rails: Trump
Musk has said that the America Party would target "just 2 or 3 Senate seats and 8 to 10 House districts." He believes this would be "enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people." The move has drawn criticism from President Donald Trump, who called it "ridiculous," and said Musk had gone "completely off the rails."
Business hurdles
Tesla's car deliveries fell by 14% last quarter
Tesla's car deliveries in the last quarter fell by 14% year-on-year. The company is facing stiff competition from other automakers such as BYD, which have been consistently beating Tesla's sales numbers. These challenges, coupled with Musk's political ambitions, have contributed to the decline in Tesla's shares.