By Emma Whitaker 
Tesla’s stock took a hit Monday, sliding 7.6% in pre-market trading after CEO Elon Musk revealed plans over the weekend to launch a new political party, the “American Party,” positioning himself as a direct challenger to President Donald Trump. Market analysts warn Musk’s bold move could spark a fierce backlash from Trump, putting short-term pressure on Tesla’s stock.
“Musk’s timing couldn’t be worse,” said Wedbush analyst Dan Ives. “Tesla’s at a pivotal moment, and investors want Musk laser-focused on the company, not stirring up political storms in Washington. This is the last thing shareholders needed.”
Ives emphasized that escalating tensions with Trump, especially heading into the 2026 midterms, could spell trouble for Musk’s empire, including Tesla and SpaceX. “We’re still all-in on Tesla’s AI-driven future, but this political gamble is a clear negative for the stock right now.”
Billy Leung, a strategist at Global X ETFs, echoed the sentiment. “Tesla investors aren’t signing up for a political sideshow. Musk needs to get back to running the business—do that, and the stock will rebound. Instead, he’s pulling the company into another headline-grabbing mess.”
Some see Musk’s move as a calculated defense strategy. Jason Hsu, founder and chief investment officer at Rayliant Global Advisors, suggested that with Musk’s ties to Trump fraying, forming a new party could be a way to safeguard his ventures. “Backing a few congressional candidates wouldn’t cut it for Musk’s political clout,” Hsu said. “Launching a party and eyeing a run for office? That’s a bigger play—risky, but potentially game-changing.”
Still, the market’s immediate reaction underscores investor unease. As Musk steps deeper into the political arena, all eyes are on how this high-stakes showdown with Trump could impact Tesla’s bottom line.
Andreas Lundberg 
Dale Chaucer