Tesla shares plunge 7% pre-market after Musk announces the founding of 'The Amerian Party'

Musk declares founding of a third party with deficit reduction as top priority

Analysts: "Contrary to what investors want"

After Tesla CEO Elon Musk announced plans to found a new political party, 'The Amerian Party', on the 7th (local time), Tesla's stock price plunged over 7% in pre-market trading, starting at $291. In recent weeks, Musk has criticized President Trump's 'One Big Beautiful Bill (OBBB)' for causing massive fiscal deficits that could bankrupt the US. Following discord with Trump, Musk conducted a poll on his social media X last month, asking if the US needed a third party. About two-thirds supported the creation of a third party. Based on this, on the 6th, Musk announced the founding of 'The Amerian Party' on X. The so-called Amerian Party is known to prioritize deficit reduction and responsible spending as key policies, and aims to modernize defense with AI and robotics.

He said, "We will focus only on 2~3 Senate seats and 8~10 House districts." He explained this should "be enough to hold the casting vote on controversial bills and truly reflect the will of the American people."

Musk's political involvement has been an issue for investors. Earlier this year, Musk led the so-called Department of Government Efficiency (DOGE), reflecting Trump's pledges to streamline federal government organization and budgets, but this negatively affected Tesla's brand image. After Musk left DOGE in May, Tesla's stock price recovered, but as he again enters politics, investors are anxious.

Dan Ives, a longtime Tesla enthusiast and analyst at Wedbush Securities, said, "Musk's deep political involvement and challenge to the Beltway establishment run counter to the direction Tesla investors/shareholders want." He added, "Core Musk supporters will back him no matter what, but many Tesla investors are exhausted by Musk's continued political turn."

Musk's announcement was criticized by James Fishback, CEO of Invest Arizona and a Trump associate. In direct response to the founding of the new party, he postponed the listing of the Arizona Tesla Convexity ETF. He also urged Tesla's board to keep Musk's actions in check.

Neil Wilson, investment strategist at Saxo Market, pointed out, "Investors are concerned about two things: the potential damage to Musk's businesses due to Trump's anger, and more importantly, Musk's attention being distracted."

Musk's early political activity was praised by President Trump but has since soured. Musk has opposed Trump's OBBB, calling it madness that would increase America's debt burden. Trump, in turn, has threatened to revoke government subsidies and federal contracts to Musk's businesses.

President Trump criticized, "A third party has never succeeded in America," and added, "Elon has gone off the rails and become a totally wrecked train."

Meanwhile, a poll conducted by U.S. survey firm Quantus Insight on the 6th (local time) found that 40% of respondents supported Musk's founding of a third party. 14% responded there was a "very high chance" they would support or vote for the party, and 26% said "somewhat likely."

By Jung-A Kim, contributing reporter kja@hankyung.com