Tesla Stock Drops Over 3% Amid CEO Succession Report; Musk Denies Plans

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Tesla, Inc., the world’s leading electric vehicle (EV) manufacturer, experienced a sharp decline in its stock price, dropping 3.38% to close at $282.16 on April 30, 2025, following a report by The Wall Street Journal that the company’s board had initiated a search for a new CEO to succeed Elon Musk. The news, which cited sources familiar with the matter, sparked uncertainty among investors, contributing to a volatile trading session. The report suggested that the board’s move was prompted by concerns over Musk’s increasing involvement with the Trump administration and his role as head of the Department of Government Efficiency (DOGE), which has drawn criticism and led to protests against Tesla.

The Wall Street Journal Report and Market Reaction

On April 30, 2025, The Wall Street Journal published a report claiming that Tesla’s board members had contacted several executive search firms approximately a month earlier to explore options for a new CEO to succeed Elon Musk. The report, citing anonymous sources, suggested that the board’s actions were driven by Musk’s heavy involvement with the Trump administration, particularly his leadership of DOGE, which aims to streamline federal operations and reduce government spending. The report noted that board members had met with Musk, urging him to publicly commit to dedicating more time to Tesla, though it remained unclear whether Musk, a board member himself, was aware of the succession planning or if his recent pledge to refocus on Tesla had influenced the efforts.

The news triggered an immediate sell-off, with Tesla’s stock falling over 3% during regular trading on April 30, closing at $282.16, down from $292.13 the previous day. In extended-hours trading, the stock recovered slightly, gaining 0.13%, reflecting mixed investor sentiment. Posts on X captured the market’s reaction, with users like @InnovatingCoin noting a 3% drop in overnight trading and @marketsday highlighting the WSJ report as a key driver. The stock’s volatility underscores the market’s sensitivity to Musk’s leadership, given his outsized influence on Tesla’s brand and valuation.

Tesla’s Recent Performance: A Challenging Period

Tesla has faced significant challenges in 2025, with its stock price reflecting a tumultuous year. The company’s shares have declined 25% year-to-date (YTD), erasing much of the gains from a 54% surge over the past year and a remarkable 500% return over five years. The recent 3% drop on April 30 follows a broader sell-off, with the stock losing nearly 50% of its value from a record high of $488.54 in mid-December 2024, post the U.S. presidential election. Several factors have contributed to this downturn:

1. Plunging Sales and Profits: Tesla reported a 13% drop in vehicle deliveries for Q1 2025, delivering 336,681 vehicles compared to 387,000 in Q1 2024, marking the weakest quarterly performance in nearly three years. Total revenue fell 9% YoY to $19.34 billion, missing analyst expectations of $21.11 billion, while net income plummeted 71% and adjusted income dropped 39%. Auto revenue declined 20%, reflecting lower demand and production disruptions during the transition to a refreshed Model Y.
2. Consumer Backlash and Brand Damage: Musk’s high-profile role in the Trump administration, particularly at DOGE, has sparked widespread protests and vandalism targeting Tesla showrooms and charging stations in the U.S. and Europe. Sales in EV-friendly markets like France and Denmark fell 59% and 67% YoY, respectively, in April 2025, while European sales dropped 44% in February. Analysts, including Gene Munster of Deepwater Asset Management, attribute much of the sales decline to brand damage caused by Musk’s political activities.
3. Rising Competition: Tesla faces intensifying competition from Chinese EV makers like BYD, which overtook Tesla in global revenue, reporting $100 billion in 2024. BYD’s broader portfolio, including hybrids, and aggressive pricing have eroded Tesla’s market share, particularly in China and Europe.
4. Trade and Tariff Concerns: The Trump administration’s steep tariffs on imported auto parts and vehicles have raised costs for Tesla, which relies on global supply chains. Musk has publicly advocated for lower tariffs, stating, “The tariff decision is entirely up to the President of the United States,” but acknowledged that tariffs could add 5–10% to vehicle costs.
5. Production Challenges: Tesla’s retooling of production lines for the refreshed Model Y led to several weeks of lost production in Q1 2025, contributing to the delivery shortfall. The Cybertruck, Tesla’s futuristic pickup, has faced weak demand due to its polarising design and quality issues.

These challenges have fueled investor concerns about Tesla’s growth trajectory, particularly as Musk’s attention has been divided between Tesla, DOGE, Spacex, X Corp, Xai, and Neuralink.

The CEO Succession Debate: Why Now?

The WSJ report, despite being denied, reignited longstanding debates about Musk’s leadership and Tesla’s succession planning. Musk has been Tesla’s CEO since 2008, steering the company from a niche EV startup to the world’s most valuable automaker, with a market capitalisation of $780 billion as of April 2025. His visionary leadership, particularly in advancing autonomous driving and AI, has been central to Tesla’s valuation, which some investors argue is more tied to Musk’s innovation than traditional automotive metrics.

However, Musk’s involvement in the Trump administration since January 2025 has raised concerns among investors and analysts. As head of DOGE, Musk has led controversial efforts to cut federal jobs and budgets, drawing criticism from labour unions, pension funds, and consumers. Protests organised by groups like “Tesla Takedown” have targeted Tesla dealerships, with vandalism reported in the U.S., Europe, and China. Musk’s support for far-right political movements in Europe, including Germany’s Afd party, has further alienated some Tesla customers, particularly in EV-friendly markets.

The WSJ report suggested that the board’s succession discussions were a response to these distractions, with some directors, including co-founder JB Straubel, meeting major investors to reassure them of Tesla’s stability. Activist investors have long criticised Tesla’s board, which includes Musk’s brother Kimbal Musk and James Murdoch, for lacking independence and failing to rein in Musk. Board chair Robyn Denholm, who defended Musk’s $56 billion compensation package, has also faced scrutiny over her own pay and oversight capabilities.

Musk’s pledge to reduce his DOGE involvement to “a day or two a week” starting in May 2025, announced during Tesla’s Q1 earnings call on April 22, may have been an attempt to address these concerns. However, the WSJ report, even if inaccurate, highlighted the market’s sensitivity to any perceived shift in Musk’s leadership, with posts on X like @KepCalmTrustRam warning that the board’s actions could undermine investor confidence in Musk as Tesla’s “real boss.”

Tesla’s Strategic Pivot: From EVS to AI and Robotics

Amid these challenges, Tesla is undergoing a strategic transformation, with Musk emphasising the company’s future as an AI and robotics leader rather than a traditional automaker. Key initiatives include:

• Robotaxi and Autonomous Driving: Tesla plans to launch a driverless “robotaxi” by 2026, with an initial service starting in spring 2025. The vehicle will lack a steering wheel or pedals, relying on Tesla’s Full Self-Driving (FSD) technology. Recent regulatory easing by federal authorities for autonomous vehicle testing has boosted investor optimism.
• Humanoid Robots: Tesla is developing humanoid robots, with Musk touting their potential for domestic and industrial applications.
• Affordable EV Platform: Tesla reaffirmed plans to launch “more affordable models” by June 2025, though production details remain unclear. This shift comes after Musk pivoted from prioritising an affordable EV to focusing on autonomous technologies.

These initiatives align with Musk’s vision of Tesla as a technology company, but they carry risks, including high R&D costs and uncertain consumer adoption. The company’s valuation, trading at a forward P/E ratio of over 60x, reflects investor bets on these futuristic technologies rather than current financial performance.

Analyst and Investor Perspectives

Analysts and investors are divided on Tesla’s outlook following the CEO succession rumours and recent performance:

• Bearish Views: Dan Ives of Wedbush Securities, a longtime Tesla bull, described the Q1 delivery numbers as a “disaster,” warning of a “brand tornado crisis” due to Musk’s political involvement. Ross Gerber of Gerber Kawasaki Wealth, an early Tesla investor, called for Musk’s removal as CEO, arguing that the brand is “broken” and may not be fixable. Gene Munster of Deepwater Asset Management attributed the sales drop primarily to brand damage.
• Bullish Views: Some investors remain optimistic, citing Tesla’s long-term potential in AI and robotics. Posts on X, such as @endless_frank, suggested that a new CEO handling day-to-day operations could be bullish, allowing Musk to focus on strategic vision. The stock’s 5% recovery on April 2, 2025, after reports that Musk might leave DOGE, reflects hope that his refocus on Tesla could stabilise performance.
• Valuation Concerns: Morningstar analysts estimate that tariffs could increase Tesla’s vehicle costs by 5–10%, while the company’s high P/E ratio raises questions about sustainability. Gary Black of The Future Fund warned that revised delivery guidance could push the stock lower in 2025.

Of 45 analysts polled by LSEG, 18 recommend a “Buy,” 15 a “Hold,” and 12 a “Sell,” with a median target price of $295, suggesting limited near-term upside from the current $282.16.

Market Sentiment on X

Posts on X reflect a polarised investor base. @ICtradeideas and @OpenOutcrier highlighted the WSJ report and the stock’s 3% drop, framing it as a significant development. @rwang07 expressed shock, noting the timing after Musk pledged to refocus on Tesla. Conversely, @Tesla’s official account reiterated Denholm’s denial, reinforcing Musk’s role as CEO. The sentiment underscores the market’s reliance on Musk’s leadership, with some investors viewing the succession rumours as a threat to Tesla’s “hopium” driven by Musk’s charisma, as noted by @KepCalmTrustRam.

Broader Industry Context

Tesla’s challenges are set against a dynamic EV industry. Global EV sales grew 25% in Europe in February 2025, but Tesla’s market share fell to 9.6%, its lowest in five years. Chinese competitors like BYD and Polestar, backed by Geely, are gaining ground with competitive pricing and innovative models. The Trump administration’s tariffs, aimed at protecting U.S. automakers, have disrupted supply chains, impacting Tesla less than rivals like Ford or Stellantis but still raising costs.

Musk’s political alignment has also created unique challenges. While his ties to Trump initially boosted Tesla’s stock post-election, the backlash from progressive consumers and international markets has offset these gains. The broader market, with the Nasdaq up 2% on April 29, 2025, highlights Tesla’s underperformance relative to tech peers like Nvidia and Meta.

Implications for Investors

The 3% stock price drop and CEO succession rumours raise critical questions for investors:

1. Musk’s Leadership: Musk’s ability to refocus on Tesla, as pledged, will be crucial. His reduced DOGE involvement could mitigate brand damage, but ongoing political controversies may persist.
2. Corporate Governance: The board’s denial of the WSJ report may temporarily calm markets, but activist investor pressure for greater independence could intensify, particularly if sales and profits continue to decline.
3. Strategic Risks: Tesla’s pivot to AI and robotics offers long-term potential but requires significant investment and execution. Delays in the robotaxi or affordable EV could further erode investor confidence.
4. Valuation and Volatility: The stock’s high valuation and one-year beta of 1.8 indicate significant volatility. Investors must weigh Tesla’s growth prospects against near-term risks like tariffs and competition.

Is Now the Time to Buy, Hold, or Sell?

• Buy: Long-term investors bullish on Tesla’s AI and robotics vision may view the dip as a buying opportunity, especially if Musk refocuses on Tesla. The stock’s 500% five-year return supports this case.
• Hold: Investors with existing positions may prefer to hold, awaiting clarity on Q2 2025 results (due July 28) and progress on the robotaxi and affordable EV. The median target price of $295 suggests modest upside.
• Sell: Risk-averse investors concerned about brand damage, tariff costs, and Musk’s distractions may consider selling, particularly given the stock’s 25% YTD decline and competitive pressures.

Investors should consult certified financial advisors, as advised by LiveMint, and monitor Tesla’s Q2 performance and Musk’s actions post-DOGE.

Conclusion

Tesla’s stock price declined by over 3% on April 30, 2025, following reports of a CEO succession search, which reflects investor unease about Elon Musk’s divided focus and the company’s weakening financial performance. The Wall Street Journal’s report, though denied by Tesla’s board chair, Robyn Denholm and Musk himself, highlighted legitimate concerns about Musk’s role in the Trump administration and its impact on Tesla’s brand. With Q1 2025 deliveries down 13%, profits plunging 71%, and competition intensifying, Tesla faces a critical juncture.

Musk’s pledge to reduce his DOGE involvement and Tesla’s pivot to AI and robotics offer hope, but execution risks and brand damage pose challenges. Investors must navigate a volatile stock, balancing Tesla’s long-term potential against near-term uncertainties. The board’s swift denial may stabilise sentiment, but Tesla’s ability to regain sales momentum and deliver on its ambitious vision will determine its trajectory. For now, the market remains on edge, with Tesla’s stock a barometer of Musk’s influence and the company’s resilience in a rapidly evolving industry.