Musk's announcement of a new political party has spooked investors, causing a 7% drop in Tesla shares amid a sales decline in the second quarter. Analysts express concerns that Musk's political involvement diverts attention from Tesla, especially during a critical time for the company. Following a feud with President Trump over tax legislation, Trump's threats to cut federal subsidies added to shareholder anxiety. Investors now prefer Musk to avoid politics to focus on the business at hand, as initial relief over his detachment from government has quickly turned sour.
Musk's political ambition has spooked investors as the auto company reports a decrease in sales in the second quarter. Tesla shares have tumbled after CEO Elon Musk announced plans to launch a new US political party amid his ongoing feud with President Donald Trump.
Musk's announcement has fuelled further concerns amongst analysts about his dedication to the automaker after it reported a sales decline in the second quarter driven by Musk's political involvement.
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, analyst at Wedbush Securities, said.
After leaving the Trump Administration and DOGE, there was initial relief from Tesla shareholders that Tesla just got back its biggest asset, Musk. That relief lasted a very short time.
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