In the wake of Elon Musk‘s political aspirations, traders who bet against Tesla Inc. TSLA are projected to earn approximately $1.4 billion due to a resultant drop in the company’s stock.
What Happened: Elon Musk's plan to launch a new U.S. political party has sparked doubts about his focus on Tesla's future. Coupled with his ongoing public clash with President Donald Trump over the tax-cut and spending bill, this led to nearly a 7% drop in Tesla's shares during early trading on Monday, according to a Reuters.
With the shares valued at $296, those who bet against the electric vehicle maker are poised to make around $1.4 billion, according to data from analytics firm Ortex. This follows a $4 billion profit made by short sellers on June 5, after Tesla’s largest single-day market value drop, also due to the Musk-Trump social media spat.
By the close of trading, Tesla’s shares had dropped 6.8% to $293.94, marking a total loss of 22.5% year-to-date.
Why It Matters: Musk’s political ambitions have been a point of concern for investors, with some suggesting that the lack of an alternative CEO could be detrimental to Tesla’s future. The company’s shares have been on a downward trajectory, with profits and deliveries hitting multi-quarter lows, leading to investor unease.
Notably, veteran investors and analysts, including Ross Gerber and Dan Ives, have criticized Musk’s return to politics and questioned the Tesla Board of Directors as the company’s stock was on a declining spree on Monday.
President Donald Trump has also expressed his discontent with Musk’s political plans, describing them as a “train wreck” and suggesting that the U.S. system is not designed for third-party disruption.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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