Tesla stocks are poised for a significant decline in the US, as investors worry that Elon Musk might introduce more challenges for electric vehicle manufacturers by potentially launching a new political party.
On Monday, Tesla shares dropped over 7% in pre-market trading, which could erase approximately $70 billion (£51 billion) from the company’s market capitalization at the Wall Street opening.
Should the stocks decrease significantly, Musk’s net worth could fall by more than $9 billion, bringing it down to around $120 billion. According to Forbes, Musk, along with the head of SpaceX, ranks among the wealthiest individuals globally, with a combined fortune of about $400 million.
Tesla’s stock, currently valued at just under $10, is experiencing downward pressure largely due to Musk’s relationships with both the company and former President Donald Trump.
Musk’s staunch support for Trump has sparked consumer backlash, and the unpredictable nature of his relationship with the former president raises concerns about Musk getting sidetracked from his responsibilities, potentially leading to repercussions for the company.
Wedbush Securities analyst Dan Ives pointed out that Musk’s financial involvement in US political parties could deter investors.
“Musk diving deep into politics and now attempting to establish a Beltway is the opposite direction Tesla investors and stakeholders hope he would take at this critical juncture for the company,” Ives noted, adding that there is a palpable “broader fatigue” regarding Musk’s political endeavors.
On Sunday, Trump criticized Musk’s ambitions, labeling the American Party as a “silly” initiative.
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Trump took to Truth Social to express his disappointment over Musk’s new direction, stating: “I’m sad to see Elon Musk go to Rails completely.”
Over the weekend, Musk revealed the formation of the American Party on his X platform, declaring: “We live in a one-party system, not a democracy, which is bankrupting our country with waste and graft. Today, the American Party is formed to restore your freedom.”
Source: www.theguardian.com
