Tesla shares dive as investors fear new Elon Musk political party will damage brand
Fall of 7% in premarket trading would wipe $70bn off firm’s value as market frets CEO’s foray into politics will distract from role
Tesla shares are headed for a sharp decline in the United States, as investors fear that Elon Musk’s creation of a new political party could create more problems for the electric car maker.
Tesla shares fell more than 7% in pre-market trading on Monday, threatening to wipe nearly $70 billion (£51 billion) off the company’s market value when Wall Street opens.
If the stock falls by such a large amount, Musk’s share price will fall by more than $9 billion to around $120 billion. Elon Musk, the boss of Tesla and SpaceX, remains the richest man in the world, with a fortune estimated at around $400 billion, according to Forbes magazine.
Tesla is valued at just under $1 trillion, but its stock is under pressure due to the Tesla CEO’s relationship with Donald Trump.
Elon Musk’s strong support for the US president initially sparked negative reactions from consumers, and now his evolving relationship with Trump is raising investor concerns that he is being distracted from his work or that the White House is penalizing his company.
Dan Ives, an analyst at Wedbush Securities, said Musk’s announcement of funding a US political party would raise investor concerns.
“Simply put, Musk’s increased involvement in politics and his attempt to challenge the Washington establishment run counter to what Tesla investors/shareholders want him to do at this crucial time in Tesla’s history,” Ives said, adding that there is a “general sense of burnout” among Tesla investors, as Musk, the company’s largest shareholder, will not step away from politics.
On Sunday, Trump called Musk’s plan to create a party for America “ridiculous,” launching fresh attacks on the world’s richest man.
