Tesla shares drop 7% after Musk unveils new U.S. political party
Tesla shares sold at $293 per share in morning trading but was on track to see its worst day of trading since June 5 when it tumbled 14% as the feud between Musk and U.S. President Donald Trump erupted into public view.
On Saturday, the world's richest man said the so-called America Party may focus on "just 2 or 3 Senate seats and 8 to 10 House districts," going so far to suggest it could be "enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people."
Tesla saw a Wall Street rebound in May after Musk left his Department of Government Efficiency role amid a decline in company sales.
However, Musk could lose federal subsidies that support SpaceX and his Starlink global satellite Internet services provider, Trump recently warned, as Tesla stock saw a drop on July 1.
In April, Tesla shares saw a 5% jump at one point during daily trading as Musk teased about exiting the White House, which later called the reports "garbage."
But Musk's heavy involvement in U.S. political affairs has made investors nervous.
"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," Dan Ives, global head of technology research at Wedbush Securities, said Sunday in a note.
Musk and Trump have clashed over the Republican's recently-passed tax spending bill for which no Democrat voted for approval.
"While the core Musk supporters will back Musk at every turn no matter what, there is broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track," Ives added.
On Sunday, the president called the creation of Musk's new America Party "ridiculous" and stated the Tesla chief had gone "completely off the rails" as Musk sided with Democrats saying Trump's new tax bill will add trillions to the U.S. national debt.
Sales of Tesla's EVs fell over 13% from April to June versus the same time last year. In addition, European sales dropped by nearly 50% in April.
Meanwhile, Tesla reported a staggering 14% year-on-year-decline in its second-quarter car deliveries, missing its own expectations as nationwide "Tesla Takedown" protests gripped the EV maker and Tesla dealerships dealt with acts of arson fueled in anger over Musk's meddling in U.S. government policies and operations.
Also, Tesla faces rising competition in the Chinese market as other global companies, such as Apple, seek to end reliance on China's hefty manufacturing capabilities.
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