Tesla loses $70 billion in stock market value in one day

Shares of electric vehicle maker Tesla fell nearly 7% in Monday's trading session on the Nasdaq, wiping out nearly $70 billion in market capitalization.

The decline comes after its chief executive, Elon Musk, a former adviser and friend of the US president, said he was forming a new US political party, prompting an angry response from President Donald Trump.

The tech company's shares fell 6.80% to $293.92 each, marking its worst market drop since June 5, when it lost 14.26%, as Elon Musk and Donald Trump traded barbs on social media.

With this drop, Tesla's stock has fallen 27.22% so far in 2025 on the U.S. stock market.

In market capitalization, the electric vehicle manufacturer lost $68.961 billion in just one day, but it pales in comparison to the $349.584 billion it has lost so far this year. The company went from being valued at $1.296 trillion at the beginning of the year to $946.768 billion on Monday, July 7.

Face to face

The Tesla CEO announced Saturday that the party would be called “America Party” and could focus on just two or three Senate seats and eight to ten House districts.

He further suggested that this would be sufficient to exercise the decisive vote on controversial laws, ensuring that they serve the true will of the people.

"I am saddened to see Elon Musk go completely off the rails and become a disaster over the last 5 weeks," Trump wrote Sunday night on his Truth Social platform, also mentioning Musk's announcement Saturday that he is forming a political party to rival the major Republican and Democratic parties.

Before boarding Air Force One in New Jersey on Sunday, Trump also called Musk's announcement "ridiculous" and said it would sow confusion.

The billionaire's involvement in politics has been a source of controversy for investors. Earlier this year, Musk played a key role in the so-called Department of Government Efficiency and worked closely with President Trump, a decision seen as potentially damaging to the Tesla brand.

Criticizes Musk

Experts believe the billionaire's decision to enter politics unnerved shareholders.

“Quite simply, Musk’s further political involvement and now attempt to take on the Washington establishment is exactly the opposite of what Tesla shareholders want him to go in during this pivotal period in the brand’s history,” said Dan Ives, global head of Technology Research at Wedbush Securities.

“While Musk’s core supporters will have his back no matter what, there is a broader sense of exhaustion among many Tesla investors as Musk continues to pursue a political path,” he wrote.

Neil Wilson, a strategist at British trading platform Saxo Markets, noted that investors were concerned on two fronts: “First, that further friction between Musk and Trump would lead to further cuts to US government electric vehicle subsidies, and second, that Musk seemed 'distracted.'”

Continue at the top

Elon Musk continues to lead the ranking of the world's richest people, with an estimated fortune of $361 billion, according to Bloomberg data.

By 2025, Musk's wealth is projected to fall to $86.7 billion.

Despite Musk's sharp decline in wealth, he surpasses people like Mark Zuckerberg, creator of Meta, formerly known as Facebook, as well as Larry Ellison, co-founder of Oracle, and Jeffrey Bezos, CEO of the online retailer Amazon. (With information from CNBC)