Tesla Stock Down 6% Pre-Market As Elon Musk Announces New Party After Trump Split

Shares of EV giant Tesla Inc. (TSLA) are trading over 6% lower in pre-market trading on Monday after the company's CEO, Elon Musk, announced the formation of his new political party over the weekend.

Musk announced the formation of the "America Party" on the social media platform X on Saturday.

"By a factor of 2 to 1, you want a new political party and you shall have it!" Musk added, referencing a poll he conducted the day before.

While initially suggesting the party would not back a presidential candidate in 2028, Musk later said that "it's not out of the question." For now, Musk said the focus would be on flipping "2 or 3 Senate seats and 8 to 10 House districts" over the next 12 months.

The move comes amid Musk's renewed public feud with President Donald Trump, which escalated after the billionaire entrepreneur publicly opposed Trump's "big, beautiful bill,” alleging it would increase the country’s national debt.

Trump, in turn, threatened to cut the government contracts and subsidies to Musk’s companies, including Tesla and SpaceX, and said that Musk went sour over the cuts to EV subsidies in the bill.

On Sunday, Trump also slammed Musk’s plans to form his party as “ridiculous.”

William Blair downgraded its rating on Tesla this morning to “Market Perform” from “Outperform,” citing negative implications from President Trump's "Big, Beautiful Bill" and Musk's foray back into politics.

"Investors are growing tired of the distraction at a point when the business needs Musk's attention the most and only see downside from his dip back into politics," William Blair analyst Jed Dorsheimer told investors.

Meanwhile, on Stocktwits, retail sentiment around TSLA is currently trending in the ‘bearish’ territory, coupled with ‘high’ message volume.

Musk, in May, had said that he would scale back political spending and remain Tesla CEO for another five years, a move cheered by investors.

"Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction investors/shareholders want him heading during this crucial period for the Tesla story," wrote Wedbush analysts led by Dan Ives in a note Sunday.

Ives, a Tesla bull, with a $500 price target on the EV maker, further opined that Musk does “not need to keep poking the bear” while warning Trump could create more hurdles for Musk, Tesla, and SpaceX if this political battle intensifies heading into the 2026 midterms.

TSLA stock is down by about 22% this year and up by about 25% over the past 12 months.

Read Next: Elon Musk’s ‘America Party’ To Accept Bitcoin – Tesla CEO Says ‘Fiat Is Hopeless’

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