Tesla shares fell more than 3% on Monday after its CEO, Elon Musk, announced plans to form a new political party called the "America Party", thus sparking investor concerns about his commitment to the company.
The decline was also recorded in early trading in Frankfurt, signaling continued pressure on the company's shares as the US (US) markets reopened after the Independence Day holiday.
According to technology analyst firm Wedbush, Musk is seen as Tesla's most important asset, and his active involvement in the political arena risks affecting the company's focus and performance.
In a note to investors, Wedbush said that Tesla needs Musk to be fully engaged in his role as CEO, not to deviate into politics, especially at a time when the company is facing tensions with former US President Donald Trump.
Trump previously slammed Musk's proposal to form a new party as "nonsense", and claimed that their relationship is now increasingly strained.
He also questioned the appointment of Musk's ally as head of NASA, which he said could pose a conflict of interest given Musk's business involvement in the space sector.
Musk's move is seen as another episode in his feud with Trump, and could potentially prompt intervention from Tesla's board of directors if it has long-term effects on the company.
