Despite these controversies, is Musk’s political downfall the sole reason for Tesla’s stock collapse?

The reality is more complicated. Tesla is at a transition point, replacing the best-selling Model Y with a refreshed version. Many potential buyers are likely waiting for the new model, slowing sales.

Additionally, while Tesla stock began 2024 at $370 per share, it has now fallen to around $280. Some of this decline is due to weaker-than-expected financial performance, but a deeper issue may be at play.

Tesla has long been considered a “cult stock”—one that thrives on the vision and promises of its leader rather than traditional financial metrics. Its stock surged in 2020 and again in 2023, reaching valuations that Bloomberg analysts deemed unjustifiable.

At one point, Tesla’s market capitalization was 90 times its projected earnings. Musk’s ambitious claims, such as an $800 billion valuation by 2029 fueled by a yet-to-exist robotaxi service, have driven these speculative spikes.

Now, the market is undergoing a harsh correction. Investors who once believed in Tesla’s limitless potential are reconsidering their positions. The question remains: Is this the beginning of Tesla’s downfall or just another bump in the road?

The coming months will determine whether Tesla can separate its future from the cult of Elon Musk.

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