Tesla shares will probably fall even further as CEO Elon Musk continues to devote his attention to politics, Morgan Stanley analyst Adam Jonas told clients in a Tuesday note. Tesla stock fell nearly 7% on Monday, erasing $68 billion from the company’s market capitalization after Musk announced on Saturday that he was forming a new America Party. “While the situation remains fluid, we believe investors should be prepared for further devotion of resources (financial, time/attention) in the direction of Mr. Musk’s political priorities, which may add further near-term pressure to TSLA shares,” Jonas told clients in a 12-page report. Musk decided to form a third party in response to Congress passing President Donald Trump’s One Big Beautiful Bill Act last week. Once a senior advisor to Trump, Musk has had an acrimonious falling out with the president due to his staunch opposition to the tax and spending legislation. Musk has criticized the law for failing to address the large federal budget deficit and growing U.S. national debt. The law also ends federal tax incentives for electric vehicles that benefit Tesla, though Musk claims this isn’t the reason for his opposition. Despite the latest call, Morgan Stanley still maintains the equivalent of a buy rating on Tesla with a 12-month stock price target of $410, implying 39% upside from Monday’s close of $293.94 per share. Tesla is down 26% so far this year. TSLA YTD mountain Tesla shares have fallen 26% in 2025.