Tesla’s market value plummeted by $79bn (£60bn) on Monday after shares fell 6.8% at the close of US trading, following growing investor concerns over Elon Musk’s decision to launch a new political party.
The electric vehicle giant’s market capitalisation tumbled from just over $1tn to approximately $921bn, with the value of Musk’s personal stake reduced by nearly $15bn to under $120bn. Despite the hit, Musk remains the world’s richest person, with an estimated net worth of around $400bn, according to Forbes.
The steep drop in Tesla’s share price comes amid mounting anxiety on Wall Street over Musk’s increasing political involvement and its potential impact on the company’s performance and image.
Musk, who is also the CEO of SpaceX, has already courted controversy through his on-and-off alliance with US President Donald Trump. While his initial support for Trump triggered backlash among some consumers, his recent falling out with the Republican frontrunner has left investors concerned that political distractions, or even possible retribution from a future Trump administration, could hamper his ability to lead Tesla effectively.
Dan Ives, an analyst at Wedbush Securities, described Musk’s decision to fund and launch a political party as “alarming” for shareholders.
“Very simply, Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take during this crucial period for the Tesla story,” said Ives. He added that there is a “broader sense of exhaustion” among investors over Musk’s refusal to separate his political ambitions from his corporate responsibilities.
The billionaire entrepreneur unveiled the formation of the “America Party” over the weekend on his social media platform X (formerly Twitter), stating: “When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy. Today, the America party is formed to give you back your freedom.”
The announcement was swiftly rebuked by Trump, who lashed out on his own platform, Truth Social, calling Musk’s move “ridiculous”.
“I am saddened to watch Elon Musk go completely ‘off the rails,’ essentially becoming a TRAIN WRECK over the past five weeks,” Trump wrote, escalating the public feud between the two high-profile figures.
With Musk’s foray into politics drawing headlines and ire in equal measure, shareholders are increasingly worried that the Tesla CEO’s focus may be drifting from the company’s core operations at a time when the EV industry is facing heightened competition and economic uncertainty.
