Shares in Tesla (TSLA) tumbled lower today as new fears over the future of Elon Musk as chief executive were raised following the revival of his political ambitions.
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Musk said over the weekend, via a post on his social media platform X, that he had formed a new political party. The America Party he thundered would “give you back your freedom…Backing a candidate for president is not out of the question, but the focus for the next 12 months is on the House and the Senate.”
Political Pain
Tesla’s shares are down nearly 22% in the year to date, hit by increased competition from Chinese rivals as well as some disquiet over the company’s designs. Arguably the biggest drag has been Musk’s previously close relationship with President Trump, including heading up the cost-cutting Department of Government Efficiency.
Musk’s popularity, and with it the reputation of the brand, dived as a result. Investors were also worried about the time Musk spent on his political antics compared with trying to fix Tesla’s business problems.
The share price has recovered recently as Musk and Trump had a very public falling out, suggesting that he would be spending more time behind the Tesla wheel.
But those doubts have resurfaced following his weekend announcement.
Leadership Agenda
“Setting up a new party is going to require hard graft and Musk will have to press the flesh to convince people to support his political ambitions,” said Dan Coatsworth, investment analyst at AJ Bell. “That suggests leadership is back on the priority agenda for Tesla’s board meetings, questioning if Musk can do both politics and business. The answer could be heavily influenced by the direction of the share price.”
Victoria Scholar, head of investment at interactive investor, added: “There is a distant idea that Musk garnering great political influence could mean a bounce back in interest in the green energy transition and a boost to green subsidies. However, the more realistic, shorter-term likelihood is that Musk’s political shift is negative for Tesla which needs a more hands-on approach from its boss.”
Is TSLA a Good Stock to Buy Now?
On TipRanks, TSLA has a Hold consensus based on 14 Buy, 12 Hold and 9 Sell ratings. Its highest price target is $500. TSLA stock’s consensus price target is $293.09 implying a 0.74% upside.
