Elon Musk Launches the America Party. How Should You Play Tesla Stock Here?
Tesla (TSLA) shares lost about 7% on Monday after billionaire Elon Musk announced plans to launch a new political party – the “America Party.”
Musk’s announcement arrives on the heels of his very public feud with President Donald Trump. He aims to reshape U.S. politics by disrupting the two-party system.
Following a sharp decline in the Tesla stock price on Monday, the EV maker has fallen below the $1 trillion threshold. Its current market cap sits at $946 billion.
The launch of the “America party” is a troubling development for TSLA investors, primarily because it amplifies concerns of executive distraction at a time when the company is already under immense pressure.
Tesla is currently struggling with a demand slowdown, aging vehicle lineup, and a meaningful lag in the rollout of its artificial intelligence (AI) and robotaxi initiatives – all of which require focused leadership.
The billionaire’s political pivot not only diverts his attention from the EV manufacturer but risks alienating key stakeholders, including government partners as well. Trump has already threatened to cut subsidies to Musk’s companies and his tax-and-spending bill removes EV credits as of September 2025. These credits have historically played a crucial role in Tesla’s growth and competitiveness.
According to Wedbush’s Dan Ives, Musk’s political ambitions are “exactly the opposite direction” shareholders want him to take. A near-7% decline in TSLA shares Monday reflects that anxiety and the potential for reputational damage.
Tesla shares are slipping also because William Blair analyst Jed Dorsheimer downgraded the EV stock to “Market Perform,” saying the “Big Beautiful” bill dampens the outlook further.
Trump’s tax-and-spending bill will remove access to the $7,500 federal EV tax credit on Sept. 30, which, according to Dorsheimer, “requires a reset in expectations.”
Plus, Musk’s political ventures could also hurt TSLA stock price moving forward, he noted, adding “we would prefer this effort to be channeled towards the robotaxi rollout at critical juncture.”
Investors should also note that Tesla at a forward price-earnings (P/E) ratio of nearly 229x at the time of writing is not inexpensive to own by any stretch of the imagination.
Wall Street already rates Tesla stock currently at “Hold” only – and the America Party revelation could make more analysts recalibrate their expectations for the EV company in the coming days.
The mean target on TSLA sits at about $298 at the time of writing, in line with its current price.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com