How Would Your Tesla Stock Fare If Elon Musk Stepped Down?

Before Tesla announced it’s first-quarter earnings on April 22, its stock was down 44% on the year and shares plummeted 6% the day before. To say Q1 results fell well below Wall Street expectations is an understatement.

Among the lowlights was the EV maker’s net income falling 71% amid heavy competition from Chinese carmakers (such as BYD), a lack of new models and CEO Elon Musk’s backing of far-right causes. As Barron’s noted, delivering around 40,000 less vehicles than Wall Street anticipated and about 50,000 fewer than the company did in Q1 of 2024 didn’t help Tesla’s bottom line.

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However, Musk told analysts during the conference call that he would be cutting down his time leading President Donald Trump’s Department of Government Efficiency (DOGE) initiative, and Tesla stock rose 5% in after-hours trading, just as it did when Politico floated rumors that Musk was on his way out of Trump’s inner circle at the beginning of April.

Musk scaling back his DOGE responsibilities could help or hinder the company’s price-per-share, depending on how much consumers feel Musk has sullied the brand. A more interesting discussion is: How would Tesla stock fare if Musk left the company altogether?

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Has Much Has Musk Damaged the Tesla Brand?

While Musk is promising to be a more hands-on CEO moving forward, questions remain about his commitment to Tesla — or to any of his companies. When Musk nonchalantly says things like, “I am stretched pretty thin. I have like 17 jobs,” he’s expressing the real worries many industry experts, and Tesla shareholders and employees, are thinking.

At this point, Tesla is a “meme stock,” according to Forbes contributor Peter Lyon, who said that the company would likely crash without Musk “pumping it.” Despite the real volatility and risk involved owning Tesla stock now, the brand and Musk command a cult-like following on social media.

But many feel Tesla needs a less politically motivated and less divisive CEO, including early investor Ross Gerber, who told Sky’s Business Live that, “It’s time for somebody to run Tesla. The business has been neglected for too long.

“There are too many important things Tesla is doing, so either Elon should come back to Tesla and be the CEO of Tesla and give up his other jobs or he should focus on the government and keep doing what he is doing but find a suitable CEO of Tesla,” Gerber added.

Musk and Tesla are denying that the company board launched a search for Musk’s successor last month, calling The Wall Street Journal’s report “a deliberately false article.” However, it’s interesting to note that when rumors first started about Musk cutting down or leaving his DOGE role, the same “fake news” rhetoric was aired.

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Musk Is Synonymous With Tesla

If Musk were to step down, many investors could pull out, causing a collapse. But getting rid of a key person on whom the company is extremely reliant might boost shareholder confidence and lift Tesla shares, similar to what happened when Musk was replaced as X CEO in June 2023.

Regardless of if he stays or goes, Musk is synonymous with Tesla, and there’s a dedicated group of major investors like Musk himself, his brother Kimbal, institutional investors like Vanguard and BlackRock and loads of dedicated retail investors who truly believe their leader will spur confidence among his fanbase with his claims to produce cheaper EVs and grow robot and self-driving technologies.

Melanie Musson, insurance and finance writer at Clearsurance.com, told GOBankingRates that despite Musk’s questionable social influence, it will be his vision and Tesla’s quality products that will prevail in the end.

“The brand has not become too toxic to rebound,” she said. “People tend to be reactive, so Tesla is out of favor. However, they can react the other way if their impression changes. The fact that Tesla manufactures quality electric vehicles remains relevant. The technology and product have inherent value.”

Before Trump’s inauguration on Jan. 20, Tesla stock was trading around $425 per share. It closed at $280.52 on May 1. Tesla targets are fluctuating, with an average price of $283.69, a high forecast of $450 and a low forecast of $115, according to TipRanks.

However, in America, every person and company gets seemingly infinite chances to make a comeback, and there’s no reason to think that the richest person in the world won’t bounce back and revitalize Tesla, if he gives it the proper attention.

“Musk is integral to Tesla’s past success, and it hasn’t changed,” said Musson. “People don’t like him as a public figure. He was more popular when he was mysteriously in the shadows. His personality is generally ill-favored. However, he has failed and come back stronger time and time again. Based on his track record, it’s likely he will bounce back. Like him or not, he’s brilliant.”

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This article originally appeared on GOBankingRates.com: How Would Your Tesla Stock Fare If Elon Musk Stepped Down?