Something surprising is happening with Tesla right now. The company’s core electric vehicle (EV) business is going through a rough patch, sales are falling, profits have dropped sharply, and its reputation in some regions is suffering. Yet, despite all this, Tesla’s stock is shooting up. In the past month alone, it has jumped 23%, and since the weak earnings report in April, it’s up nearly 50%. So what’s going on? Why are investors so excited about a company whose numbers don’t look very strong right now? The answer seems to lie in one word: Musk.

The Elon Musk Effect: What’s Fueling the Surge

On May 28, Elon Musk announced on X (formerly Twitter) that his role as a special government employee had ended. While the statement was short, the market responded quickly. Investors took it as a sign that Musk was returning full-time to Tesla, something they’ve wanted for a while. As soon as the news broke, Tesla’s stock jumped again.

Even before the announcement, speculation about Musk stepping back from his political duties had already started pushing the stock upward. Dan Ives, an analyst at Wedbush known for supporting Tesla, called Musk’s update “music to the ears of Tesla shareholders.” This shows just how much faith investors still place in Musk. Even when the company is struggling, his presence alone seems to spark hope for a turnaround.

Putting the Stock Rally in Context

A 23% gain in one month is definitely strong, but it helps to see it in context. The S&P 500 has gone up by 6.2% over the same time. Meanwhile, the “Magnificent Seven” tech stocks which include companies like Apple, Microsoft, and NVIDIA, have seen returns of around 14%.

These tech stocks are being lifted by renewed optimism around global trade, helped by recent political shifts, including President Trump’s “Liberation Day” and some easing of tariff tensions. So while Tesla’s jump stands out, it’s not wildly unusual. In the current bullish market for tech, sharp gains like this can happen even for companies facing challenges.

The Disconnect Between the Stock and the Business

Still, there’s a big gap between how Tesla stock is performing and how the actual business is doing. In the first quarter of 2025, Tesla’s revenue fell by 9% compared to last year. Even more alarming, its profits dropped by a huge 71%. In Europe, Tesla’s EV sales plunged by 49% in April alone. Part of the decline is being linked to Elon Musk’s political views. His support for Germany’s far-right AfD party has damaged Tesla’s image in the region, turning off some consumers.

This political controversy is now mixing with declining sales, creating a tough situation for the brand. Despite this, investors are staying hopeful. They seem to believe Musk can turn things around thanks to his track record of innovation and bold ideas.

The Robotaxi Dream: A Glimpse Into the Future

One of Musk’s latest promises is adding to the excitement. He recently announced that Tesla will unveil its fully autonomous robotaxi on June 12 in Austin, Texas. The robotaxi, if real and ready, could be a massive breakthrough. It’s a self-driving car that can work like a taxi without a human driver. Musk has made similar claims in the past, and none have fully materialized yet but each time, the idea grabs attention.

The announcement has already shaken up the market. Uber’s stock dropped right after Musk’s robotaxi post, showing that competitors are taking it seriously. If Tesla manages to launch a working robotaxi, it could open up a brand-new revenue stream and help cover up its weak EV numbers. But that’s a big “if.”

Mounting Pressure on Musk and Tesla’s Leadership

While Musk’s promises are fueling excitement, behind the scenes, there’s growing pressure. The Wall Street Journal recently reported that Tesla’s board has started looking for a possible CEO replacement, though Tesla denied the report. This rumor reflects concerns that Musk might be too stretched. Right now, he’s involved with at least five other companies: SpaceX, X (Twitter), The Boring Company, Neuralink, and xAI. Investors and board members worry Tesla is no longer his top priority.

In fact, Tesla chair Robyn Denholm received a letter from a group of institutional shareholders. They asked Musk to commit to working at least 40 hours per week at Tesla. Their letter stated:

“The current crisis at Tesla puts into sharp focus the long-term problems at the company stemming from the CEO’s absence… The Board must ensure that Tesla is not treated as just one among many competing obligations.”

What’s Next for Tesla?

Looking ahead, Tesla has a lot to figure out. It must find a way to stop the decline in EV sales and rebuild consumer trust, especially in Europe. At the same time, investors are expecting the robotaxi to be a breakthrough that changes everything. All eyes are now on the June 12 robotaxi event. If it goes well, it could be the beginning of a new chapter for Tesla. But if it disappoints, doubts will grow louder, and the stock may take a hit.

Final Thoughts: A Stock Running on Belief

Right now, Tesla’s soaring stock isn’t really backed by strong business numbers—it’s being driven by belief in Elon Musk’s ability to lead and innovate. Investors are hoping that his renewed focus will guide Tesla through this difficult phase. But hopes and hype can only go so far. If Tesla wants to keep climbing, it must start delivering real results again. Until then, its stock will likely stay unpredictable floating somewhere between big dreams and hard truths.