"Investor Fatigue Grows Over Musk's Political Activities"
Elon Musk, Chief Executive Officer (CEO) of Tesla, declared that he would break with President Donald Trump and launch a new political party, causing Tesla's stock price to plunge.
On July 7 (local time), Tesla shares closed at $293.94 on the New York Stock Exchange, down 6.79% from the previous trading day. During the session, the price dropped as low as $288.77 before partially recovering in the afternoon. Due to this decline, Tesla's market capitalization shrank by approximately $150 billion in a single day, falling to around $946.8 billion.
Tesla's stock price has repeatedly experienced significant drops whenever CEO Musk has clashed with President Trump. On June 5, when their relationship first reached a breaking point, the stock plummeted 14.26% in a single day. On July 1, after CEO Musk reignited the conflict by resuming his criticism of President Trump, the stock fell an additional 5.34%.
This time, CEO Musk officially broke with President Trump and announced plans to form a new political party, further deteriorating investor sentiment. After the "One Big Beautiful Bill (OBBBA)," which contains President Trump's key policy agenda, passed the U.S. Congress, CEO Musk conducted an online poll on X (formerly Twitter) on July 4, asking whether to launch a new party. The following day, he declared, "Today, the America Party is being founded to return freedom to you."
In response, President Trump criticized CEO Musk's announcement of a new party during a meeting with reporters on July 6, calling it "ridiculous" and saying it was "completely off the rails."
Dan Ives, an analyst at Wedbush Securities, stated in an investor memo the previous day, "CEO Musk's deeper involvement in politics and his willingness to challenge the Washington establishment are actions that are completely contrary to what Tesla investors and shareholders want from him at this critical time for Tesla." He added, "While Musk's core supporters will back him under any circumstances, many Tesla investors are growing weary of his continued political pursuits."
During last year's presidential election, CEO Musk emerged as a key figure in Trump's victory by helping secure his election. With the launch of Trump's second administration, Musk led the federal government restructuring as head of the Department of Government Efficiency (DOGE). After completing his 130-day special government service, Musk turned his back on President Trump and began criticizing the OBBBA bill.
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