Why Tesla (TSLA) Stock Is Down Today

What Happened?

Shares of electric vehicle pioneer Tesla (NASDAQ:TSLA) fell 7.4% in the morning session after CEO Elon Musk announced over the weekend his intention to form a new political party, the "America Party."

The move has intensified a public feud with President Donald Trump and sparked significant investor concern about Musk's increasing political involvement and potential distractions from running the electric vehicle giant. 

The announcement immediately weighed on the stock, which fell nearly 7% in pre-market trading, reflecting market unease with the venture. 

This political controversy adds to existing headwinds for Tesla, which recently reported its second consecutive quarterly drop in vehicle deliveries for Q2 2025. The company delivered 384,122 vehicles, a 13.5% decline from the same period last year, and missed Wall Street's expectations. 

Analysts from Wedbush noted that investors are showing a "broader sense of exhaustion" with Musk's political activities during a crucial time for the company.

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What Is The Market Telling Us

Tesla’s shares are extremely volatile and have had 51 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 5 days ago when the stock gained 4.4% on the news that the company reported its second-quarter production and delivery numbers, which, despite a year-over-year decline, were not as low as some investors had feared. 

Tesla announced it delivered 384,122 vehicles in the second quarter. While this represents a 13.5% drop from the same period last year, the figure was roughly in line with, and slightly better than, the bleak expectations on Wall Street. Analysts had anticipated deliveries of around 385,000 to 387,000 vehicles. 

The market's positive reaction suggests a sense of relief, as some investors were bracing for a larger miss. The company produced over 410,000 vehicles during the quarter, indicating that production capability remains robust despite softening demand and increased competition. 

The report also highlighted a strong performance in its energy storage division, with 9.6 GWh deployed. Investors are now looking ahead to the full earnings report on July 23 for more details on profitability and the company's outlook.

Tesla is down 22.7% since the beginning of the year, and at $293.18 per share, it is trading 38.9% below its 52-week high of $479.86 from December 2024. Investors who bought $1,000 worth of Tesla’s shares 5 years ago would now be looking at an investment worth $3,164.

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