Shares of Tesla (TSLA) dropped more than 6% in early pre-market trading, falling to $293.49 after closing last week at $315.35. The slide follows CEO Elon Musk’s announcement that he plans to launch a new U.S. political party, which has raised fresh concerns among investors about the company’s leadership focus.
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Wedbush analyst Dan Ives, a longtime Tesla bull, flagged the development as a potential distraction at a time when the company is already under pressure. “Tesla needs Musk as CEO and its biggest asset and not heading down the political route yet again,” Ives wrote in a client note. He added that the Tesla board might be forced to step in if Musk continues down this path.
Previously On Mr. Musk Goes to Washington
Musk over the weekend unveiled plans for the “America Party,” a third political party he says will support a handful of congressional races in 2026. The move comes shortly after President Trump signed a large tax-and-spending package, which Musk criticized as harmful to innovation and the electric vehicle industry.
Trump responded by calling the idea of Musk’s new party “ridiculous” and threatened to review federal contracts tied to Tesla and SpaceX. He also took aim at Musk on social media, suggesting the billionaire’s political ambitions may create conflicts of interest.
Tesla is already down 22% year-to-date and recently reported a 13.5% drop in quarterly deliveries. The company is set to report Q2 earnings on July 23, with analysts expecting a 19% decline in EPS and an 11.5% drop in revenue.
Is Tesla a Buy, Sell, or Hold?
Tesla boasts a Hold rating on the Street, based on 35 ratings. The average price target for TSLA stock is $293.09, implying a 7.06% downside potential.
