Tesla stock tumbles nearly 7% as Elon Musk launches ‘America Party,’ sparking investor anxiety

Tesla shares dropped close to 7% in premarket trading on Monday, following CEO Elon Musk’s announcement of a new political party in the US. The move has raised fresh concerns among investors about Musk’s attention being diverted from the struggling automaker.

Over the weekend, Musk unveiled the “America Party” in direct response to President Donald Trump’s recently signed tax cut and spending bill. The move comes amid a high-profile clash between the two men that has spilled across social media.

The political distraction arrives at a delicate time for Tesla. The company recently reported a second consecutive drop in quarterly vehicle deliveries and is facing increasing pressure from competitors in the electric vehicle market.

Since hitting a record high in December, Tesla’s stock has plunged 35%, making it the worst-performing stock in the so-called “Magnificent Seven” group of high-growth US tech firms this year.

Earlier this year, Musk had assured shareholders that he would scale back political involvement and continue as Tesla CEO for five more years. That reassurance temporarily lifted investor sentiment. However, his renewed political activity has raised doubts again.

Further spooking the markets, investment firm Azoria Partners postponed the launch of a Tesla-focused exchange-traded fund (ETF) following Musk’s political announcement. 

Trump, meanwhile, dismissed Musk’s new party as “ridiculous” and criticised Musk’s past nomination of Jared Isaacman to lead NASA, citing potential conflicts of interest.

Tesla’s board has previously faced scrutiny for what critics call a hands-off approach to overseeing Musk’s growing list of ventures, which include leadership roles at five other companies. Legal experts say the board is now facing increased pressure to rein in his political involvement.