Political Whirlwind: Elon Musk's 'America Party' and Its Impact on Tesla

Tesla shares experienced a significant decline of nearly 7% in premarket trading on Monday following CEO Elon Musk's announcement of a new U.S. political party. This move has created unease among investors, questioning Musk's focus on Tesla's prospects. On Saturday, Musk revealed his 'America Party,' expressing dissatisfaction with former President Donald Trump's policies.

The development exacerbates Musk's ongoing tension with Trump, occurring amidst a second consecutive quarterly drop in Tesla deliveries. Their discord over the tax bill led to a prominent social media clash in June. Trump retaliated by threatening to cut government contracts for Musk. Neil Wilson, a UK investor strategist at Saxo Markets, highlighted investors' concerns about Musk potentially losing focus on Tesla due to his political ventures.

In light of Musk's political ambitions, questions arise regarding the Tesla board's next steps. The board, which has been criticized for its oversight of Musk, must consider its approach as he continues to juggle politics and business leadership. With Tesla's stock price significantly dropping since Trump's re-election, investors remain wary of Musk's involvement in political activities.

(With inputs from agencies.)