It's his party and he'll cry if he wants to.
Tesla (TSLA) CEO Elon Musk may be hearing the strains of Lesly Gore's 1963 hit “It's My Party” as he contends all manner of misery.
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The electric vehicle maker's stock was down 7.2% at last check on July 7, days after Musk announced the creation of the “American Party” to compete against the Republican and Democratic parties, declaring on X, the social media site he owns, that “today, the America Party is formed to give you back your freedom.”
Musk's political power move comes after the world's richest man's relationship with President Donald Trump blew up like a SpaceX rocket — which also belongs to Musk — over the administration's tax and spending plans.
The billionaire had pumped at least $270 million to help Trump win the White House and went on to work as a special government employee for the Department of Government Efficiency (DOGE).
The controversial agency ripped through the federal workforce like a chainsaw, which Musk proudly wielded at one point, as well as government agencies that were responsible for overseeing his companies..
But now Musk has no reason to smile as Trump blasted him on Truth Social, his own social media site.
Trump calls Musk ‘train wreck'
“I'm saddened to watch Elon Musk go completely ‘off the rails,’ essentially becoming a TRAIN WRECK over the past five weeks,” Trump said in his post. “The one thing Third Parties are good for is the creation of complete and total disruption and chaos.”
Meanwhile, Tesla is facing trouble in China, according to The Wall Street Journal, which reported that the company's market share has shriveled while other Chinese automakers have become more popular.
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Chinese consumers said the vehicles feel increasingly tired and out of touch with local tastes, the Journal noted, noting that the top China-designed EVs come with features not normally found in Teslas.
In addition, Musk's reputation as a partner for Beijing in Washington took a hit after his relationship with Trump soured.
Tesla shares are down 28% this year, while the stock is up 16% from this time in 2024.
William Blair downgraded Tesla to market perform from outperform without a price target, according to The Fly.
While the removal of the $7,500 electric vehicle tax credit from the “Big, Beautiful Bill's” budget reconciliation was expected, the elimination of the Corporate Average Fuel Economy (CAFE) fines “requires a reset in expectations,” the firm said in a research note.
The standards, enacted after the 1973 to 1974 oil embargo, were intended to reduce fuel consumption by increasing the average fuel economy of cars and light trucks
William Blair said that it believes the combination of a demand headwind from the tax credit removal and Tesla's over $2 billion in profit from regulatory credits being at risk “may be too much for investors to bear.”
The firm said that it expects the company's reduction in regulatory credit revenue to result in a “direct hit to profitability, prompting yet another across-the-board reset to Street models.”
HSBC recently said that Tesla's reported second quarter volumes “imply an exceptional June” and finds it “difficult to explain this sales bump.”
Tesla reported around 384,000 vehicle deliveries in the second quarter, down 14% from a year ago and marking the second straight quarterly decline.
Hedge fund manager cites Tesla predictions
The third quarter may see some pulled forward demand ahead of the new tax bill, but the firm said that it thinks the June result “looks like an aberration” and doesn't expect the 170,000 to 180,000 vehicle June run-rate to “be the new normal.”
HSBC maintained a reduce rating and $120 price target on Tesla shares.
Related: Veteran Tesla analyst drops 4-word call
None of Musk's troubles come as a surprise to Doug Kass.
The longtime hedge fund manager and TheStreet Pro contributor, reminded readers that “The Musk/Trump romance was short lived — as I predicted in my ‘15 Surprises for 2025‘.”
Kass, who described the Musk-Trump relationship as “a limited production novella,” had forecast that the “romance between Trump/Musk, doesn't make it past Spring 2025.”
He also invoked another '60s hit, Neil Sedaka’s “Breaking up is Hard to Do” to describe the Musk-Trump tribulations
“Reading the room (and increasingly uncomfortable with Musk's notoriety), President Trump begins to be openly critical of Musk and finally abandons him entirely,” Kass had observed in the December 23, 2024 post. “Musk lashes out and retaliates by forming his own party and has a nervous breakdown.”
Kass also predicted that “Tesla makes little progress in ‘full self driving.'”
“The U.S. government takes away the $7,500 tax credit, competition from China intensifies, unit sales drop by double digits and Tesla's profits collapse,” the post continued. “In addition, an ‘accounting issue' (related to warranties) is uncovered by a short-oriented research boutique. All these factors cause the shares of (TSLA) to drop to $100/share.”
Kass also predicted that “Elon Musk's non-Tesla investments suffer from reduced U.S. government support.”
“Musk grows ever more unhinged throughout 2025 — his mother attempts a family intervention,” the months-old post concluded.
Stay tuned…
Related: Fund-management veteran skips emotion in investment strategy
