That was the question Wall Street was asking on Friday as the electric auto company's share price plummeted following news that the US's top financial regulator was suing Musk for fraud and seeking to ban him from running a public company. The shorts are up $643 million for the year, after being in negative territory before the lawsuit was announced.
Tesla's 5-year credit default swap TSLA5YUSAX=MG hit its highest price ever on Friday, the day after the U.S. Securities and Exchange Commission said it was suing Musk and pushing for his ouster.
Tesla laid off 9 percent of its workforce this summer and has endured a mass exodus of executives, including heads of engineering, sales, supply-chain management, human resources and finance.
The $420 share price Musk set for the take-private deal, SEC investigators said, was itself a weed reference created to impress his then-girlfriend, the synth-pop musician Grimes. Ousting Musk, who has a huge celebrity status with more than 22 million Twitter followers, would be hard and could damage the company.
It's not clear that Musk will be removed, as he is denying the allegations, but the possibility jolted investors because Musk is seen as nearly synonymous with Tesla. And some billionaires, especially ones who are named Elon Musk, maybe shouldn't be in charge of public companies. Analysts have expected Tesla to raise fresh money by selling new shares.
Musk reportedly said this would compromise his character and so he backed out at the last minute, which prompted the formal charges.
Analysts at the bank said: 'The SEC civil action may lead to Musk's exit from Tesla, either permanently or temporarily, and the Musk premium in the shares dissipating'.
Musk said in a statement that the SEC's "unjustified action" left him "deeply saddened and disappointed".
Johnson says the suit only confirms what he's been saying for a while now, and that it will force investors to actually focus on the company's fundamentals.
Musk's rejection of an SEC settlement infuriated some investors who would have rather put the episode behind them. If Tesla fails to meet production targets in the second half of 2018, it will need a different source of cash to pay for the $1.3 billion in debt it has coming due by March 2019.
Tesla might be able to thrive without Musk if it could replace him with a more experienced automotive or technology veteran who has been at the helm of a profitable company, said Karl Brauer, executive publisher of Kelley Blue Book. The Motley Fool owns shares of and recommends Tesla and Twitter.