SpaceX investors may be overlooking a major risk: There’s no replacing Elon Musk
It's no longer just the Musk faithful buying into his companies — it’s also millions of unwitting holders of 401(k)s.
New York (CNN) — Ahead of its June IPO, SpaceX described its CEO as the “driving force behind our growth, innovation, and operational success.” His loss, “whether due to death, disability, or otherwise … could significantly disrupt our management structure.”
While that’s fairly standard language for a regulatory filing, it is also a staggering understatement.
The disclosure, known as a “key person risk,” nods to a dilemma at the heart of Elon Musk’s empire, a rockets-and-robots-and-satellites-and-AI behemoth with aspirations to “make life multi-planetary”: Musk may be a once-in-a-generation talent, but he is not immortal.
“There’s only one Elon Musk, and they’re not going to create another one of him,” said Dan Ives, a veteran tech analyst and one of Musk’s biggest fans on Wall Street. “It’s a blessing and a curse because investors, when they buy these companies, they’re betting on Musk as much as they are the companies themselves.”
‘They have no future if he dies’
This key-person risk, sometimes called key-man risk, is hardly new — some Tesla shareholders have tried to block Musk’s pay packages in part because they believe the company is too beholden to him. Nor is it unique to Musk: Any company with a celebrity-like CEO whose leadership is perceived to be vital to the business faces a similar dilemma.
But Musk’s particular vulnerability now extends far beyond the boardroom, potentially ensnaring millions of mom-and-pop investors now exposed to one or both companies through index funds.
Tesla (TSLA), valued at $1 trillion, is a power player in both the tech-heavy Nasdaq 100 and the broader S&P 500, the most popular destination for passive investors looking for steady long-term gains. SpaceX (SPCX), now valued at nearly $2 trillion after its record-smashing June IPO, got fast-tracked entry to the Nasdaq and could be included in the S&P 500 as early as mid-2027.
Together, the two companies represent $3 trillion in market value. By most accounts, that figure is heavily inflated by the “Musk multiple,” an unofficial (and practically impossible to quantify) premium that reflects investors’ willingness to go along with the world’s richest person when he claims to be barreling toward bold, still largely theoretical goals, such as building orbital data centers, colonizing mars, or developing millions of commercially viable human-like robots — a claim he reiterated Tuesday during a speech at the G20 Summit in North Carolina.
To be sure, the Musk faithful have historically been rewarded with enviable returns. Tesla, which went public in 2010, boasts by far the biggest stock market value of any car company in the world, even though it has never outsold — or even come close to outselling — rivals like Toyota or General Motors.
But it is no longer just the Musk faithful buying into his companies — it’s also millions of unwitting holders of 401(k)s. Funds that track an index are essentially forced to buy a company’s shares to continue mirroring the index’s performance. The Nasdaq alone has more than 200 such products, including the Invesco QQQ trust and iShares NASDAQ 100 ETF, with more than $800 billion in assets.
The macabre reality is that if Musk were to suddenly become unable to lead, much of that $3 trillion in market value would evaporate.
“It would be massive because so many people believe that his entire empire is just him,” said Tim Quigley, a professor of strategic leadership and governance at the International Institute for Management Development. “I think the market is probably underpricing the risk.”
One prominent investor described Musk himself as “the biggest risk” to SpaceX.
“I think with stocks like SpaceX, for example, a good trillion dollars of value is just … Elon,” Ross Gerber, co-founder of investment firm Gerber Kawasaki, told The Information this year. “God forbid anything happens to him… They have no succession plan, and they have no future if he dies.”
SpaceX and Tesla didn’t respond to requests for comment.
The succession question
Musk’s singular value to his companies highlights a trend that has alarmed corporate governance experts and Corporate America: the rise of the “genius founder.”
“What we see are more and more companies that allow the founder to entrench themselves as the central vehicle for value in the firm,” said Mary-Hunter McDonnell, associate professor of management at the University of Pennsylvania’s Wharton School. “Especially in tech, we’re letting companies do things that really exacerbate that risk … with governance structures that have very few checks and balances.”
Musk, who founded SpaceX in 2002, controls 48% of the company through a mix of Class A shares (which the public can buy, with one share equaling one vote), and Class B “super-voting” shares reserved for insiders. Because Musk controls the vast majority of super-voting shares, he is essentially in full control of the board and can be removed only if he decides to fire himself.
The company doesn’t appear to have a formal succession plan — something governance experts say is critical to mitigating key-person risk and ensuring shareholders don’t panic if tragedy strikes.
In its IPO prospectus, SpaceX itself acknowledged that it is “highly dependent on the continued service and performance” of Musk, “whose leadership, vision, and expertise are critical to the development of our technologies and the execution of our business strategy.”
At the same time, the company said it does not have a key-person life insurance policy for him, and it isn’t sure how — or whether — it could replace him.
“The process of identifying … a successor with the combination of skills and experience possessed by Mr. Musk…could be lengthy and uncertain,” the document stated. “And there can be no assurance that we would be able to attract or retain a suitable replacement in a timely manner or at all.”
Musk has never publicly communicated a succession plan at Tesla, though he told the Wall Street Journal in 2023 that he’s identified “particular individuals” to the board whom he’d want to take over “if something happens to me unexpectedly.”
Of course, Musk, 55, has lieutenants at SpaceX and Tesla with experience managing the day-to-day when Musk turns his attention to other enterprises, as he did in early 2025 to oversee the gutting of federal government employment under the Trump administration.
The question, said Craig Crossland, dean of Texas Christian University’s Neeley School of Business, is whether Musk’s vision and unique capabilities have been “institutionalized” among those deputies.
“I don’t think we’ve had the opportunity to see that,” Crossland said.
A lesson from Steve Jobs
Every analyst and corporate governance expert interviewed for this article offered the same name when asked if there was ever a CEO who came close to Musk-level key person risk: Steve Jobs, the co-founder and longtime CEO of Apple, who died in 2011 at 56.
Like Musk, Jobs was seen as a genius founder whose persona was woven into his company’s DNA.
That left Apple’s stock vulnerable to rumors and speculation about Jobs’ health after the company disclosed his cancer diagnosis in 2004. In 2008, a fake story online about Jobs’ death sent Apple stock (AAPL) falling 9%.
Similarly, Tesla stock can be sensitive to headlines about Musk. When Musk told the New York Times in 2018 that he was working “120 hour weeks” and taking Ambien to sleep amid increased scrutiny on Tesla, the shares tumbled. In 2025, as Musk focused his attention on his “department of government efficiency” in Washington, Tesla shares lost nearly half their value between January and April.
Apple was widely criticized in the late 2000s for not volunteering more information about Jobs’ health, especially as concerns about his gaunt appearance battered the company’s shares. But Jobs, who scoffed at formal succession planning and kept a tight lid on his company’s operations, did take the issue seriously, corporate governance experts told CNN. Years before his death, Jobs established a secretive internal executive training program known as “Apple University” to try to ensure his vision for the company would live on without him.
“Jobs was saying, ‘This place is bigger than me, this place is bigger than one person,’ ” Quigley said. “To me, that’s the under-written part of the Jobs story — that he had the foresight to create a program that can instill these values into the next generation.”
By the time Jobs resigned in August 2011, his hand-picked successor, Tim Cook, was a known quantity on Wall Street, viewed as a steadying force. The stock briefly dipped 5% before bouncing back.
Musk’s companies are hardly the only ones facing key-person risks, of course, but only a handful of other companies come close to the scale of Tesla and SpaceX’s market value. And no other CEO comes close to Musk’s power to enthrall Wall Street.
“A succession plan at one point is going to have to be addressed,” said Ives, the longtime Musk bull. “I think investors understand the risk. They factor it in, but it’s in the background.
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