Tesla CEO Musk, who fiercely criticized the "Big and Beautiful" bill, announced the establishment of the "American Party", and once again intervened in politics in a high-profile manner, made investors feel "tired."On July 5, Musk announced the establishment of a new political party "American Party" on social media, claiming that the party would represent "80% of the median voters" in American society and target next year's congressional midterm elections. Trump responded on the 6th that it was "ridiculous" for Musk to establish a new political party, and posted a message that night that Musk had "completely derailed and lost control" in the past few weeks and basically fell into a catastrophic situation "like a train accident", which was "sad."
Previously, on June 30, Musk posted dozens of posts criticizing the "big and beautiful" tax and spending bill pushed by Trump, calling it "the largest debt growth bill in history" and "extremely crazy and destructive". He also threatened that members of Congress who voted for the bill would lose their party primaries next year. U.S. President Trump responded by calling his behavior "inappropriate" and suggested that the U.S. Department of Government Efficiency investigate the government subsidies received by Musk's Tesla and SpaceX, and even stated that he might consider "deporting Musk."
Long-term Tesla bull and Wedbush Securities analyst Dan Ives said in a report to China Business News that "Musk's continued political line has made many Tesla investors generally feel exhausted." Ives said in the report that Musk's departure from the Trump administration in May gave Tesla shareholders and supporters a sigh of relief. “This relief lasted only a short time and with the latest announcements, the situation has only gotten worse.”
Currently, Wedbush Securities maintains its "outperform" rating and target price of $500 per share on Tesla.
Investors worry about "retaliation" from Trump administration
Ives said in the report that Tesla's stock price may come under pressure on Monday (7th) as investors worry about the actual impact if Trump and the Republican Party regard Musk as an enemy rather than a friend.
Tesla's stock price has fallen by about 22% this year, closing at $315.35 per share in the most recent trading day. As of press time, Tesla's pre-market trading has fallen by more than 6.5%.
Tesla's second-quarter financial report released last week showed that Tesla delivered 384,000 electric vehicles, basically in line with Wall Street's official expectations, but down 13.5% from the same period last year.
In terms of brand image, data from survey agency Noric and other sources show that U.S. consumers’ recognition of Tesla has dropped to 32% in the second quarter of this year. JPMorgan analyst Ryan Brinkman said in March that Tesla's decline in brand value was "unprecedented in automotive history."
In addition, investors worry that Musk's political distraction will weaken his leadership of Tesla and SpaceX, especially at a critical period in the development of autonomous driving and artificial intelligence. If Trump takes retaliatory measures, such as canceling government contracts or tightening autonomous driving regulations, it may further hinder Tesla's Robotaxi and Cybercab plans.
Wedbush Securities said in a report released on July 2 that "90% of its valuation in the next few years will be driven by autonomous driving and robotics, but Musk needs to focus on promoting Tesla's development rather than prioritizing his political views."
The initial impact of Musk’s establishment of the “American Party”?
On July 5, local time, James Fishback, a Trump ally and former adviser to the U.S. Department of Government Efficiency, announced on July 5, local time, that his investment company Azoria Partners (Azoria) would postpone the listing of an ETF targeting Tesla.
Fishback also wrote to Tesla's board of directors urging them to ask Musk to clarify his political ambitions. "Elon (Musk's name) has gone too far... Our decision is a direct response to Musk's announcement that he will form a new national political party. This will conflict with his full-time responsibilities as Tesla CEO and will distract his energy and attention from Tesla employees and shareholders." He wrote.
"If Musk goes too far in this political adventure, we wouldn't be surprised to see the Tesla board eventually step in," Ives wrote.
Earlier, media quoted people familiar with the matter as saying that Tesla's board of directors began to consider finding a successor to replace Musk due to dissatisfaction with Musk's participation in politics and the drop in stock prices caused by it. This report was later refuted by Tesla Chairman Robyn Denholm as false news.