Musk establishes the "American Party," raising valuation concerns, Tesla's night trading plummets over 7%

mitrade
2025.07.07 08:24
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Tesla CEO Elon Musk announced the establishment of a new political party called "American Party," triggering a strong market reaction, with Tesla's after-hours trading dropping over 7% at one point, resulting in a market value loss of over $70 billion. Analysts pointed out that Musk's political move has weakened shareholders' confidence in Tesla's future, leading to a delay in ETF listings. Consumer sentiment towards Tesla has declined, and sales have also significantly dropped. Analysts warned that Musk's political gamble could exacerbate Tesla's valuation volatility, and investors should be cautious of short-term risks

TradingKey - Tesla CEO Elon Musk announced the establishment of a new political party, the "American Party," on the social media platform X on July 5, 2025, Eastern Time, triggering a violent reaction in the capital markets. As a result, Tesla's after-hours trading once fell by more than 7%, with a market value evaporating by over $70 billion. As of the time of writing, Tesla's after-hours trading decline has not shown signs of stopping.

After Musk announced the establishment of the new political party, James Fishback, an analyst at the American investment company Azoria Partners, stated last Saturday that they would postpone the listing of their Tesla ETF, citing that Musk's announcement weakened shareholders' confidence in Tesla's future.

【Tesla after-hours trading decline Source: Investing.com】

This move is Musk's response to an online poll conducted on July 4, which attracted 1.249 million participants, with 65.4% supporting the breaking of the two-party system to establish a new party representing centrists. Musk stated that the United States is on the brink of bankruptcy due to "waste and corruption" and urgently needs political reform.

However, this high-profile declaration quickly raised market concerns, especially since Tesla has heavily relied on government subsidies and carbon credit income in recent years. The latest bill, "Big and Beautiful," which cancels electric vehicle tax credits, is expected to impact Tesla's profits by about $3.2 billion annually.

The impact on the brand level is even more severe. Stifel data shows that consumer net favorability for Tesla has dropped from 9% in January 2024 to 3%, with European sales declining by 52.6% compared to the same period last year. Some consumers have explicitly stated that they are boycotting purchases due to Musk's stance.

From a fundamental perspective, Tesla's Q2 2025 delivery volume was 384,100 vehicles, a decrease of 13.5% compared to the same period last year. The company is currently betting on its FSD and Robotaxi plans to reshape its growth story, but the commercialization process still carries significant uncertainty.

Analysts unanimously agree that Musk's political moves are exacerbating Tesla's valuation volatility. JP Morgan analyst Ryan Brinkman stated that Musk's political adventures pose dual pressures on Tesla's brand and finances, and investors need to be wary of short-term volatility risks.

Morgan Stanley analyst Adam Jonas also mentioned that Tesla's autonomous driving strategy is key to long-term growth, but current political risks may hinder its valuation recovery

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