Tesla Inc. shares fell after Elon Musk announced he’s forming a new political party, spurring calls for Board involvement to reign in the errant CEO.
Devoting resources and attention to a new political party runs counter to what Musk told Tesla investors he’d do during the company’s last earnings call.
He vowed to allocate “far more” of his time to the company after his work for the Trump administration ended in May.
“The board is going to have to get involved,” Dan Ives, an equity analyst at Wedbush Securities, told Bloomberg Television, saying he was frustrated as a supporter of Tesla. “There’s a line in the sand that he’s now starting to cross.”
Tesla’s stock slid 8% shortly after the start of regular trading Monday.
The shares already have declined 28% this year as the CEO’s politicking has hurt Tesla’s standing with car buyers. Tesla posted a 13% drop in second quarter deliveries, almost identical to its year-over-year decline in the first three months of the year.
“Investors are growing tired of the distraction at a point when the business needs Musk’s attention the most and only see downside from his dip back into politics,” Jed Dorsheimer, an equity analyst at William Blair, said in a note Monday, downgrading Tesla to the equivalent of a hold.
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