On Monday, Tesla’s stock dropped nearly 7%, wiping out more than $68 Billion in Value. The reason? CEO Elon Musk announced he’s starting a new political group called the “America Party.” The news hit Wall Street hard. Investors are growing concerned that Musk’s attention is shifting toward politics instead of managing Tesla and the stock performance reflects it.
Musk’s Big Move: The “America Party”
Over the weekend, Musk said he plans to create a third political party called the “America Party.” He stated that the party would aim to secure control of a few key races around 2 or 3 Senate seats and 8 to 10 in the House enough to sway important legislative decisions in Washington. Musk says it’s about making sure laws “serve the true will of the people.” But for Tesla investors, it’s one more sign that Musk is getting distracted.
The Market Reacts: $68 Billion Lost
When the markets opened on Monday, Tesla shares fell fast down about 7% by the end of the day. That added up to a $68 billion loss in market value, Tesla’s worst one-day drop of 2025 so far. Investors are nervous. Most investors would rather see Musk focused on Tesla than diving into politics.
Shareholders Want Musk to Stay in His Lane
This isn’t the first time Musk’s political activity has upset investors. Earlier this year, he took a government job in the Department of Government Efficiency (DOGE) under President Trump. Many shareholders said it hurt Tesla’s image and distracted Musk from the company. When Musk left the Department of Government Efficiency in May, Tesla’s stock started going back up. But now that he’s jumping back into politics, the stock is dropping again.
What Experts Are Saying?
Dan Ives, a well-known tech analyst at Wedbush Securities, summed it up:
“This is not what Tesla shareholders want. Musk getting more political is exactly the wrong move right now.”
He also said many investors are feeling worn out and frustrated, watching Musk spend more time on politics than on Tesla’s future.
Politics Could Hurt Tesla’s Brand
Musk’s political plans have even upset Donald Trump, who once praised Musk. Now Trump says starting the “America Party” is “ridiculous” and that Musk has gone “completely off the rails.”
The fight between Musk and Trump is not just about ego, it could hurt Tesla’s business. Musk has spoken out against Trump’s new budget plan, which would cut tax breaks for electric cars and clean energy. For a company like Tesla, that’s a big deal.
Tesla Has Bigger Problems Too
Politics aside, Tesla is also facing serious business issues:
- Tesla’s Q2 vehicle deliveries declined by 14% compared to the same period last year.
- Tesla is under growing pressure in China, where domestic EV makers are quickly catching up.
- Investors are waiting to see if Tesla can deliver on big promises around robotaxis, AI, and energy storage.
That’s a lot to handle and it’s why investors want Musk to be 100% focused on the company.
What Does This Mean for Investors?
Here’s what smart investors are thinking right now:
- Musk’s actions matter. His personal decisions have a direct impact on Tesla’s stock.
- Too many distractions. Politics and side projects are pulling attention away from Tesla’s goals.
- Time for leadership focus. Staying focused as a company begins with strong leadership at the top.
What to Watch Next?
Key points for investors and traders to watch:
- Might the board issue a response to Musk’s shift toward politics?
- What will the next earnings report show, especially after the dip in deliveries?
- Will Musk pull back from politics if the pressure grows?
Kanak Capital Markets Reviews the Tesla’s Sharp $68B Loss
Kanak Capital Markets reviews that this event serves as a reminder that in today’s markets, leadership behavior can be just as impactful as earnings reports. Investors are watching closely not just for innovation and performance, but for consistency and direction from the top.
Kanak Capital Markets is actively following how political news and leadership decisions are impacting the markets. We aim to provide timely market observations, keeping clients informed amid today’s fast-changing financial landscape.
