Tesla’s (NASDAQ:TSLA) stock took a sharp hit after CEO Elon Musk announced plans to create a new political party, raising concerns among investors about his ability to stay focused on the company’s core business. Pre-market trading on Monday saw shares drop over 7%, with the stock hitting $292.80 as of 04:22 ET (08:22 GMT).

In a Sunday report, Wedbush Securities cautioned that Musk’s political ambitions could weigh heavily on Tesla’s share price. The brokerage highlighted that Musk’s deeper dive into politics runs counter to what Tesla’s shareholders want, especially as the automaker faces shrinking sales and readies a shift toward autonomous driving technology.

Musk’s political move, dubbed the “America Party,” also comes amid an ongoing and public clash with U.S. President Donald Trump, particularly related to the recently passed “Big Beautiful Bill.”

Wedbush pointed out that although investors initially welcomed Musk stepping back from his involvement with DOGE, the new political venture might signal more distractions ahead. Analysts from the firm noted, “Tesla’s stock could face pressure as investors worry how Musk’s political stance might affect his relationship with Trump and the Republican Party.”

The brokerage also observed that independent political parties have historically struggled in the U.S., and Musk’s foray into politics could introduce new risks for Tesla. Wedbush hinted that the company’s board might need to step in if Musk’s political activities intensify.

Despite these concerns, Tesla shares have fallen nearly 17% so far this year. Although the stock has rebounded somewhat from its yearly lows, ongoing sales declines and worries over Musk’s political engagements continue to weigh on investor confidence.

Wedbush maintained its “Outperform” rating on Tesla with a $500 price target, expressing strong confidence in the company’s AI-driven innovations. Recently, Tesla tested its autonomous driving service in Austin, Texas, but investor response was muted. The automaker is also pursuing robotics through its Optimus project, which Musk says will enter production by 2026.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
Some portions of this content may have been generated or assisted by artificial intelligence (AI) tools and been reviewed for accuracy and quality by our editorial team.