Tesla Shares Drop After Musk Announces New Political Party
Tesla shares fell as much as 7.6 percent in premarket trading on Monday after its chief executive, Elon Musk, said he was forming a new American political party, provoking an angry reaction from US President Donald Trump, CE Report quotes Kosova Press.
Tesla ( TSLA ) shares later recovered some of their earlier losses, but were still down 6.5% as of 7:48 a.m. ET.
"I am saddened to see Elon Musk completely 'derailed', becoming a WRONG TRAIN over the last five weeks," Trump wrote on his Truth Social platform late Sunday, also citing Musk's announcement on Saturday that he is forming a political party to rival the main Republican and Democratic parties, CNN writes.
Before boarding Air Force One in New Jersey on Sunday, Trump also called Musk's announcement "ridiculous" and said it would be very confusing.
Neil Wilson, a strategist at U.K. trading platform Saxo Markets, said Monday that Tesla investors were worried on two fronts: first, that further friction between Musk and Trump would lead to additional cuts to U.S. government subsidies for electric vehicles and, second, that Musk seemed “distracted.”
"Investors had cheered Musk's withdrawal from politics in the first place, but now they are worried that he will withdraw again and take attention away from Tesla," Wilson wrote in a note.
Trump and Musk began trading criticism in early June, after the Tesla CEO criticized Trump's so-called "Big, Beautiful Bill" — a massive tax and domestic policy bill that the president signed into law last week. Musk has argued that the policies will add trillions of dollars to the federal budget deficit.
"When it comes to bankrupting our country with waste and bribery, we live in a one-party system, not a democracy," Musk said on his social media platform, X, on Saturday. "Today, the American Party is formed to give you back your freedom."
Trump, in his Sunday tweet, said that third political parties "have never succeeded in the United States" and that "the only thing (they) are good for is creating COMPLETE AND TOTAL DIVISIONS AND CHAOS."
