In a dramatic turn of events that blended politics and business, Tesla Inc. shares plunged nearly 7% during early U.S. premarket trading on Monday, July 7, 2025, following billionaire Elon Musk’s announcement of a new political venture — the “America Party.” At 4:01 a.m. EDT, Tesla stock was down 6.98%, trading at $291.96 on the Nasdaq premarket, compared to Friday’s close of $315.35. As of 6:29 a.m. EDT, the stock had slightly recovered but was still down 6.23%, trading at $294.59.
Why Did Tesla Shares Crash?
The sharp drop in Tesla’s share price came within hours of Musk unveiling his political intentions, creating uncertainty among investors who are increasingly wary of his growing involvement in matters outside Tesla’s core business.
Over the weekend, Musk took to X (formerly Twitter) to announce the formation of the “America Party”, a political group aimed at disrupting the two-party dominance of the Democrats and Republicans, following his open disagreement with President Donald Trump’s newly passed “One Big Beautiful Bill.”
“By a factor of 2 to 1, you want a new political party and you shall have it!” Musk posted.
“When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy. Today, the America Party is formed to give you back your freedom.”
Market Interprets Political Move as Risk
While Musk’s political activism is not new, the formal launch of a political party, with himself as a potential candidate, raises concerns about distractions from Tesla’s leadership, already grappling with production, delivery targets, and rising competition in the EV space.
Investor sentiment has historically shown sensitivity to Musk’s off-field ventures — including his Twitter/X acquisition, SpaceX controversies, and public commentary on global politics. Monday’s price drop reinforces how closely tied Tesla’s valuation is to Musk’s personal actions.
Tesla Stock: By the Numbers
Despite Monday’s setback, Tesla remains a high-growth stock with strong long-term performance metrics:
- 5-Year Return: +206%
- 1-Year Return: +24.67%
- YTD Performance (2025): Down 16.86%
- Last 5 Sessions: Down 2.79%
- 1-Month Gain: +2.19%
- 52-Week High: $488.54
- 52-Week Low: $182
- Current Market Cap: $1.01 trillion (as per Marketwatch premarket data)
Notably, Tesla closed nearly flat on Friday, down by just 0.10% at $315.35, compared to the previous close of $315.65. But the premarket drop on Monday clearly signals a shift in investor confidence, triggered by non-operational news.
Musk’s “America Party”: Political Goals and Market Implications
Musk has long criticized what he calls the “Republican/Democrat Uniparty”, and with the America Party, he is making his first formal attempt to enter the political arena as a disruptor.
While the party’s policies remain under wraps, Musk’s anti-establishment tone and emphasis on freedom, anti-corruption, and government reform signal that he’s likely to lean into populist, tech-libertarian ideologies.
But for Wall Street, the key concern is: How will this affect Musk’s focus on Tesla?
Institutional investors and analysts are already speculating whether this move will:
- Reduce his direct involvement in Tesla operations
- Invite regulatory or political scrutiny
- Impact Tesla’s brand among consumers with differing political views
- Lead to greater volatility in Tesla’s stock price
What Analysts Are Saying
Analysts remain divided on the long-term impact.
“Elon Musk is not just Tesla’s CEO — he’s its brand, its visionary, and its driver of growth. His dive into politics adds a completely new layer of uncertainty for shareholders,” said Marcus Barlow, a senior equities analyst at Hamilton & Co.
“Markets hate unpredictability. And launching a political party is the very definition of unpredictable — especially with regulatory elections, funding disclosures, and media scrutiny around the corner,” said Lisa Cheng, an investment strategist at NY Wealth Partners.
Investors Brace for More Volatility
With the Wall Street opening bell just hours away, all eyes will be on Tesla’s stock trajectory throughout the day and week. While premarket dips don’t always translate to full-session losses, the emotional response from investors suggests this story is far from over.
Some Tesla bulls argue that the political distraction is temporary and that the fundamentals of the company remain strong, driven by global EV adoption and Tesla’s expansion into AI, robotics, and energy.
However, the timing and scope of Musk’s new venture could continue to overshadow Tesla’s business performance in the short term.
A High-Wire Act for Elon Musk and Tesla
Elon Musk’s decision to enter the political battlefield by forming the America Party is already making waves — not just in Washington, but on Wall Street.
While Musk has a track record of defying expectations and bouncing back stronger, investors are clearly signaling that political ambitions come with financial consequences.
Whether Tesla can maintain its market leadership while its CEO turns political provocateur remains the multi-billion dollar question.
