Tesla Inc. TSLA CEO Elon Musk‘s announcement of a new political party has had a significant impact on the electric vehicle maker. The company’s stock plummeted by 6.79% on Monday, resulting in a loss of over $68 billion in market capitalization.
What Happened: The stock drop came after Musk announced plans to launch a new political party, raising investor concerns about possible effects on Tesla’s brand and business, according to market data.
Musk revealed his plan to establish the “America Party,” which would focus on a few Senate seats and House districts. This announcement has intensified worries about Musk’s increasing involvement in politics, a trend that has previously unsettled investors.
President Donald Trump’s initial praise for Musk’s political activities has turned into criticism, with the two clashing over various policy issues. Trump has labeled Musk’s party formation as “ridiculous” and accused him of going “completely off the rails.”
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Why It Matters: Musk’s return to politics has drawn criticism from industry veterans. Ross Gerber, co-founder of Gerber Kawasaki, and Dan Ives, from Wedbush Securities, have criticized Musk’s political re-entry.
They have also questioned Tesla’s Board of Directors as the company’s stock declined by almost 7% in a single session on Monday.
Moreover, Tesla’s stock has been affected by other factors, including a sharp drop in sales in the Chinese domestic car market during the first week of July, despite strong second-quarter deliveries. This has added to the challenges facing the company.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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