logo
Tesla slides as Musk's 'America Party' sparks investor worries

Tesla slides as Musk's 'America Party' sparks investor worries

The Star11 hours ago
The TESLA logo is seen outside a dealership in the Brooklyn borough of New York City, U.S., April 26, 2021. REUTERS/Shannon Stapleton/File Photo
(Reuters) -Tesla shares fell nearly 7% in premarket trading on Monday after CEO Elon Musk's plans to launch a new U.S. political party raised investor doubts about his focus on the electric automaker's future.
The former head of the Department of Government Efficiency (DOGE) unveiled the 'America Party' on Saturday, voicing his displeasure over President Donald Trump's 'One Big, Beautiful Bill'.
This further escalates Musk's feud with Trump even as Tesla posted a second straight drop in quarterly deliveries. Their discord over the tax bill erupted into an all-out social media brawl in early June, with Trump threatening to cut Musk's government contracts and subsidies.
"Investors are worried about two things – one is more Trump ire affecting subsidies and the other, more importantly, is a distracted Musk," said Neil Wilson, UK investor strategist at Saxo Markets.
Investors had in May cheered Musk's decision to scale back political spending and remain Tesla CEO for another five years. He had spent nearly $300 million around Trump's re-election campaign last year.
"But now (they) are worried he's going to (get) sucked back in and take his eye off Tesla," Wilson said.
The first signs of investor unease surfaced soon after Musk's announcement, with investment firm Azoria Partners delaying the listing of a Tesla exchange-traded fund.
Trump on Sunday called Musk's plans to form the "America Party" "ridiculous", saying the Musk ally he once named to lead NASA would have presented a conflict of interest given Musk's business interests in space.
TESLA BOARD MOVES
Wedbush analyst Dan Ives, a Tesla bull, said many investors are feeling a "sense of exhaustion" over Musk's insistence on immersing himself in politics.
Azoria Partners CEO James Fishback posted several critical comments on X about Musk's new party, and called for the Tesla board to clarify Musk's political ambitions and evaluate if his political involvement is compatible with his obligations to Tesla as CEO.
The new party undermines the confidence shareholders had that Musk would be focusing more on the company, Fishback said.
Musk's latest political move raises questions around Tesla board's course of action. Its Chair Robyn Denholm in May denied a Wall Street Journal report that said board members were looking to replace the CEO.
Tesla's board, which has been criticized for failing to provide oversight of its combative, headline-making CEO, faces a dilemma managing him as he oversees five other companies and his personal political ambitions.
"This is exactly the kind of thing a board of directors would curtail - removing the CEO if he refused to curtail these kinds of activities," said Ann Lipton, a professor at the University of Colorado Law School and an expert in business law.
"The Tesla board has been fairly supine; they have not, at least not in any demonstrable way, taken any action to force Musk to limit his outside ventures, and it's difficult to imagine they would begin now."
Tensions with Trump, struggling sales and an aging vehicle line-up have hurt Tesla's stock, even as the company bets on growth from autonomous vehicles.
The stock, which soared to over $488 in December after Trump's November re-election, has lost 35% since then and closed last week at $315.35.
Tesla is the worst performing stock among "the Magnificent Seven" group of high-growth U.S. companies this year.
(Reporting by Joel Jose and Arsheeya Bajwa in Bengaluru and Amanda Cooper in London; additional reporting by Medha Singh; Editing by Saumyadeb Chakrabarty and Arun Koyyur)
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

U.S. stocks close lower as Trump plans tariffs on Japan, South Korea
U.S. stocks close lower as Trump plans tariffs on Japan, South Korea

The Star

time32 minutes ago

  • The Star

U.S. stocks close lower as Trump plans tariffs on Japan, South Korea

NEW YORK, July 7 (Xinhua) -- U.S. stocks fell on Monday as renewed trade tensions weighed on investor sentiment, pulling some major indexes back from record highs. The Dow Jones Industrial Average fell 422.17 points, or 0.94 percent, to 44,406.36. The S&P 500 sank 49.37 points, or 0.79 percent, to 6,229.98. The Nasdaq Composite Index shed 188.59 points, or 0.92 percent, to 20,412.52. Nine of the 11 primary S&P 500 sectors ended in red, with consumer discretionary and materials leading the laggards by losing 1.26 percent and 1.04 percent, respectively. Meanwhile, utilities and consumer staples led the gainers by rising 0.17 percent and 0.11 percent, respectively. Markets opened lower and continued the downward trend during trading after U.S. President Donald Trump posted letters on social media addressed to the leaders of South Korea and Japan, saying that 25-percent tariffs will be imposed on imports from both countries beginning Aug. 1. He also announced tariff rates for many other countries in similar letters. U.S. Treasury Secretary Scott Bessent confirmed Sunday that the United States would begin notifying trading partners of specific tariff rates, but emphasized that formal implementation wouldn't begin until next month. He added that talks with 18 major partners were underway and hinted at potential breakthroughs in the coming days. "We're down (in stocks) after the long weekend, and it's somewhat of a critical week in terms of the tariffs," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. Technology stocks led the pullback after the news, with Tesla sliding 6.79 percent as tensions flared again between its CEO Elon Musk and Trump. "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," Wedbush analyst Dan Ives wrote. "After leaving the Trump Administration and DOGE there was initial relief from Tesla shareholders and big supporters... That relief lasted a very short time and now has taken a turn for the worst with this latest announcement." Apple and Alphabet both dropped nearly 1.7 percent, while Nvidia, Microsoft, Meta Platforms and Broadcom posted more modest declines. Amazon edged higher, bucking the broader trend. Investors are also turning their attention to the second-quarter earnings season, which unofficially kicks off on Thursday with results from Delta Air Lines. Analysts are watching closely for signs of how corporate profits are holding up in the face of trade tensions and geopolitical risk.

At trial, US professors criticise arrests of pro-Palestinian students
At trial, US professors criticise arrests of pro-Palestinian students

New Straits Times

time38 minutes ago

  • New Straits Times

At trial, US professors criticise arrests of pro-Palestinian students

NEW YORK: A group of US university professors told a court Monday that President Donald Trump's administration has created a climate of fear on campuses by seeking to deport foreign students with pro-Palestinian views. Academics from institutions including Harvard University claim students are being targeted based on their ideologies, breaching free speech protections under the First Amendment of the US Constitution. The Trump administration, which has clashed with elite US colleges over refuted claims of anti-conservative bias and anti-Semitism, has said it is simply adhering to existing immigration and visa laws. However, the arrests of several pro-Palestinian student activists, such as Mahmoud Khalil and Rumeysa Ozturk, have stirred anger in recent months. During the two-week trial in Boston, the group of professors is hoping to persuade Republican-appointed Judge William Young to protect students and staff who engage in pro-Palestinian advocacy from being deported. Nadje Al-Ali, a Middle East and anthropology professor at Brown University, told the court she could face repercussions for her work. "Although these were students, I felt like, okay, next in line will be faculty, and so it definitely felt vulnerable and targeted as a result," she said. Al-Ali, a German citizen with Iraqi roots, said she had avoided attending protests against the Trump administration's policies out of fear of being filmed and then "targeted." In the case of Khalil, a Columbia University student who was born in Syria to Palestinian parents, the US government argued that his presence in the country posed a threat to US national security. "The case is an immensely important test of the First Amendment at a moment when we need the First Amendment's protections more than ever," said the Knight First Amendment Institute at Columbia, one of the groups involved in the lawsuit.

2nd LD: Trump says to impose 25-pct tariffs on Japan, ROK
2nd LD: Trump says to impose 25-pct tariffs on Japan, ROK

The Star

time4 hours ago

  • The Star

2nd LD: Trump says to impose 25-pct tariffs on Japan, ROK

NEW YORK, July 7 (Xinhua) -- U.S. President Donald Trump said Monday on social media that 25-percent tariffs will be imposed on imports from Japan and the Republic of Korea (ROK), respectively, beginning Aug. 1. In his letters addressed to the ROK president and the Japanese prime minister that he posted on Truth Social, Trump said the new tariffs will be separate from all other sectoral tariffs. In the almost identical letters, Trump said, "Please understand that the 25% number is far less than what is needed to eliminate the Trade Deficit disparity we have with your Country." Trump warned that if the two countries raise their tariffs in response, the United States will increase its tariffs by the same amount. "As you are aware, there will be no Tariff if Korea, or companies within your Country, decide to build or manufacture product within the United States and, in fact, we will do everything possible to get approvals quickly, professionally, and routinely -- In other words, in a matter of weeks," Trump wrote in one of the letters. The president had previously indicated he would send letters to roughly a dozen countries on Monday. White House Press Secretary Karoline Leavitt said Monday afternoon that Trump plans to issue an executive order to extend the pause on "reciprocal tariffs" from July 9 to Aug. 1. Leavitt said about 12 more nations would receive similar notifications, which would also be posted on Trump's Truth Social platform.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store