Stocks Plunge Amid Trade Deal Uncertainty, Tesla Shares Sink on Musk's Political Party Announcement

Stocks fall as investors await trade deal news, while Tesla shares tumble on Musk's political party announcement. The company designs, builds, and sells electric vehicles, with a global presence and manufacturing sites in the US, China, and Germany. Net sales are primarily driven by automotive vehicle sales, with a smaller portion coming from services, energy generation and storage systems, and automotive credits.

Tesla's stock price experienced a significant decline on Monday, July 2, following CEO Elon Musk's announcement over the weekend that he has formed a new political party. The electric vehicle company's stock fell 7% in morning trading, reaching $293 per share [1].

Musk's decision to launch the America Party comes after a public falling out with President Trump over the massive policy and spending bill signed into law on July 4. Musk had threatened to form a new political party if the bill passed, and he made good on his promise by announcing the America Party on X on Saturday [1].

The announcement has reignited investor concerns over the fate of the Tesla brand, which was previously damaged by Musk's involvement in the Trump administration as the head of the Department of Government Efficiency, or DOGE. Musk stepped back from the administration in late May, but his recent political involvement could further complicate the company's focus on its core business [1].

Tesla's stock has been volatile in recent months, with a 21.3% year-to-date decline, significantly underperforming the S&P 500 Index's 5.5% gains. Despite delivering mixed earnings surprises over the past four quarters, Tesla's stock has shown resilience, gaining 5.4% in the trading session after the release of its Q1 results on April 22 [2].

Analysts remain cautious about Tesla's prospects, with 41 analysts covering the TSLA stock holding a consensus "Hold" rating. While some analysts have revised earnings estimates downward due to recent political statements and weakened demand in European markets, others point to potential catalysts such as new models and the anticipated Robotaxi announcement [3].

Tesla's second-quarter deliveries of 384,122 vehicles fell short of analyst expectations but remained nearly unchanged from the same period last year. The company reported a gross margin of 17.7% and revenue of $95.7 billion in the last twelve months [3]. Despite these mixed results, investors grew bullish on the stock after Musk provided updated production timelines for driverless robotaxi cabs.

The political landscape and Tesla's stock price remain intertwined, with Musk's political activities potentially impacting investor confidence and the company's ability to focus on its core business. As Tesla prepares to announce its second-quarter results on Tuesday, July 22, investors will closely watch for any updates on the company's earnings and the impact of Musk's political party announcement.

References:
[1] https://finance.yahoo.com/news/tesla-stock-sinks-elon-musk-145140727.html
[2] https://finance.yahoo.com/news/expect-teslas-next-quarterly-earnings-073510797.html
[3] https://www.investing.com/news/analyst-ratings/cantor-fitzgerald-maintains-tesla-stock-rating-despite-delivery-dip-93CH-4124647