Tesla shares dropped nearly 7% on Monday, wiping out over $68 billion in market value after CEO Elon Musk announced the launch of a new political party called the "America Party."
The sharp decline follows growing investor concerns about Musk's increasing involvement in politics, which many believe is distracting from Tesla's core business.
On Saturday, Elon Musk announced the launch of a new political party. He said the group will aim to win a handful of Senate and House seats to help shape important laws and decisions.
"This is enough to serve as the deciding vote on contentious laws," Musk wrote on social media, CNBC reported.
The news didn't sit well with Wall Street. Shares of Tesla (NASDAQ: TSLA) closed at $293.94 — their worst day in more than a month.
Dan Ives, a longtime Tesla analyst at Wedbush Securities, said in a note, "Musk diving deeper into politics is exactly the opposite of what Tesla investors want right now."
Musk's political activities have sparked market drama before. Earlier this year, he worked closely with former President Donald Trump on a government project.
Watch Tesla’s shares drop 14% today as Elon Musk and President Trump’s simmering feud erupts 📉
— Bloomberg Opinion (@opinion) June 5, 2025
The rout erased about $150 billion from the EV maker’s market value, the stock’s biggest decline since March 10 pic.twitter.com/NWKayqJpsT
Tesla Faces First Annual Sales Drop Amid Political Turmoil
Though he left that role in May, his new party announcement reignited tensions, including a public response from Trump, who called Musk's plan "ridiculous" and claimed the CEO had "completely lost it."
Tesla is facing multiple business challenges as well. Second-quarter vehicle deliveries dropped 14% from last year, marking the company's first annual sales decline since going public.
The electric vehicle maker is also feeling pressure from Chinese rival BYD, which is close to taking the lead in global EV sales, FX Leaders said.
Beyond the political noise, technical signals show Tesla's stock may be in a weak spot. Analysts say it has broken below key support levels and could fall further to around $225 unless a strong recovery happens.
The next earnings report, due July 23, will be closely watched. Analysts expect profits to fall 21% from last year.
Despite recent ups and downs, some analysts still believe in Tesla's long-term potential. A few even predict the stock could climb as high as $520.
But for now, many investors are concerned that Musk is too focused on politics while the company deals with slower sales, shrinking profits, and growing competition.
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