The day the Musk premium cracked
It is easy to forget how quickly an aura can curdle.
For years, Tesla wasn’t just a car company. It was a religion, an optimism machine, a bet on the future disguised as a stock ticker. And at its center stood Elon Musk, the prophet-engineer who could seemingly will new industries into being. Investors didn’t just buy the cars. They bought the myth.
But the myth has been looking threadbare lately. And the last few weeks have torn a gaping hole in it.
It started slowly. Musk left Tesla to run DOGE, Trump’s newly minted Department of Government Efficiency. He slashed civil service headcount with a chainsaw, posed with far-right politicians in Europe, and made himself the face of an ideological crusade that alienated exactly the markets Tesla depends on most. Sales fell in Germany and France. Market share shrank in China. The stock wobbled.
Then came the second chapter. This one arrived fast. Musk returned from his White House adventure just in time to torch his remaining political capital in a spectacular public feud with Trump. Within twenty-four hours, Tesla stock dropped 14 percent, wiping out $153 billion in value—the company’s largest single-day loss ever.
It wasn’t just about the numbers. It was about the signal. Musk had turned what was once an “insurance policy”—close proximity to government—into a liability. Now Tesla faces the same industry headwinds as its rivals, with one added disadvantage: it has a target on its back.
That target wasn’t inevitable. Nor was this trajectory. But it was baked into the structure of the company—and the man who controls it.
By all rights, Musk should be gone. Any normal public board would have forced him out long ago. You cannot run a company while treating it like one hobby among many, or use it as a stage for ideological theatrics. But Tesla’s board is not a normal board. It is Musk’s board. He holds 30 percent of the stock. Many of his directors are millionaires many times over thanks to his largesse. The governance structure is designed to keep him untouchable.
And even that fortress may not be enough now.
Two-thirds of Musk’s stake stems from a $56 billion stock award that Delaware courts recently threw out. Tesla is appealing the decision. If they lose, Musk’s control weakens. The board could try to re-award the compensation unilaterally, or put it to a shareholder vote. But after this latest debacle, a vote looks risky. Rewarding Musk so lavishly when his actions have directly harmed the company would be hard to justify to even the most starry-eyed investor.
And if that vote fails? Then the real danger begins. A Musk scorned is a Musk untethered. He could walk away from Tesla, taking the myth—and the market premium it fuels—with him.
That premium is no small thing. On core fundamentals, Tesla might be worth $100 billion. Today it’s worth $960 billion. The rest is Musk magic. His promises of self-driving cars and trillion-dollar tech revenues are what keep the stock aloft. Without him, the valuation deflates. With him, the brand and business risk further damage.
It’s an impossible choice for investors. Musk leaves, and Tesla loses its aura. Musk stays, and Tesla keeps bleeding credibility and focus. Either way, the future looks dimmer than it did a month ago.
For years, Musk has operated with the assumption that the rules don’t apply to him. That Tesla’s cult status would shield him from accountability. But cults are fragile things. They can reverse direction with shocking speed.
We just watched that happen. A company built on faith watched $153 billion vanish in a day. The myth is not gone yet. But it is flickering.