Musk’s political ambitions have surprised investors as the automotive company reports a decline in sales in the second quarter.
Tesla shares fell after CEO Elon Musk announced plans to launch a new political party amid a continuing feud with longtime ally, US President Donald Trump.
The electric car maker’s shares fell 7% as of 12pm (16:00 GMT) in New York on Monday. Musk announced plans to launch a new political party on Friday after disagreement with the president over the tax law that was signed into law. Trump calls the idea “silly.”
Musk’s announcement sparked further concern among analysts about their dedication to the automaker after reporting a decline in sales in the second quarter driven by Musk’s political involvement.
Trump Mask’s dispute places emphasis on investors
“Very simply, Musk’s delves deep into politics and now attempting to set up a Beltway is the exact opposite of what Tesla investors/sellers want to take him out at this important time for Tesla’s story.” “Musk’s central supporters back Mask every turn, no matter what, but there’s a broader sense of fatigue from many Tesla investors who are on political trajectory.”
“After leaving the Trump administration and the Doge [the US Department of Government Efficiency]the first bailouts from Tesla shareholders and large supporters named Tesla has reclaimed its biggest asset, the mask. That relief lasted for a very short period of time and is now even worse with this latest announcement. ”
Last week, Trump threatened to cut off billions of dollars with grants received from the federal government after the feud exploded into a full-scale social media brawl in early June.
“Me and all other Tesla investors would prefer to step out of the political business. The faster this distraction is removed, the better Tesla can return to actual business, Sean Campbell, who owns Tesla’s shares, told Reuters.
Tesla is expected to lose more than $800 billion in market valuation if current losses apply, but traders are expected to earn about $1.4 billion in paper profits from short positions in Tesla stock on Monday.
Musk’s latest move also raises doubts about the Tesla Committee’s course of action. In May, Robin Denholm’s chairman refused to report the Wall Street Journal that board members were considering replacing the CEO.
Tesla’s board has been criticized for not providing oversight for a militant and headline-making CEO, and faces the dilemma of managing him as he oversees his personal political ambitions with five other companies.
“We’re a great business law expert,” said Anne Lipton, a professor at the University of Colorado Law School and a business law expert.
The company’s stock and its future are considered closely tied to Musk, the wealthiest man in the world. According to data from the London Stock Exchange Group (LSEG), he is Tesla’s only largest shareholder.
“The Tesla Board has said quite a bit. At least in a demonstrable way, they have not taken action to restrict external ventures to masks. It’s hard to imagine them starting now,” Lipton added.
Other companies linked to Musk, including X Corp, previous Twitter and SpaceX, are not publicly available.
